Exhibit 10.44
CREDIT AGREEMENT
by and among
QAD INC.,
as Borrower
THE LENDERS FROM TIME TO TIME PARTY HERETO
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent for the Lenders
and L/C Issuer
April 19, 1999
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CREDIT AGREEMENT
This Agreement, dated as of April 19, 1999, is among QAD INC., a Delaware
corporation, the Lenders and THE FIRST NATIONAL BANK OF CHICAGO, as Agent and
L/C Issuer. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement:
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding ownership interests of a partnership or limited
liability company.
"Advance" means a borrowing hereunder, (i) made by the Lenders on the same
Borrowing Date, or (ii) converted or continued by the Lenders on the same date
of conversion or continuation, consisting, in either case, of the aggregate
amount of the several Loans of the same Type and, in the case of Eurocurrency
Loans, in the same Agreed Currency and for the same Interest Period.
"Affected Lender" is defined in Section 2.22.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity as
contractual representative of the Lenders pursuant to Article X, and not in its
individual capacity as a Lender, and any successor Agent appointed pursuant to
Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Lenders.
"Agreed Currencies" means (i) Dollars, (ii) so long as such currencies
remain Eligible Currencies, Australian Dollars, British Pounds Sterling, Hong
Kong Dollars, Dutch Guilders and the Euro, and (iii) any other Eligible Currency
which the Borrower requests the Agent to include as an Agreed Currency hereunder
and which is acceptable to all of the Lenders. For the purposes of this
definition, each of the specific currencies referred to in clause (ii), above,
shall mean and be deemed to refer to the lawful currency of the jurisdiction
referred to in connection with such currency, e.g., "Australian Dollars" means
the lawful currency of Australia.
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"Agreement" means this credit agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Fee Rate" means, at any time, the percentage rate per annum at
which commitment fees are accruing on the unused portion of the Aggregate
Commitment at such time as set forth in the Pricing Schedule.
"Applicable Margin" means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in the Pricing Schedule.
"Approximate Equivalent Amount" of any currency with respect to any amount
of Dollars shall mean the Equivalent Amount of such currency with respect to
such amount of Dollars on or as of such date, rounded up to the nearest amount
of such currency as determined by the Agent from time to time.
"Arranger" means First Chicago Capital Markets, Inc., a Delaware
corporation, and its successors.
"Assignment Agreement" means an agreement in the form of that attached
hereto as Exhibit A.
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"Authorized Officer" means any of the Chief Financial Officer, Treasurer or
Vice President of Tax and Treasury of the Borrower, acting singly.
"Available Aggregate Commitment" means, at any time the Aggregate
Commitment then in effect minus the Aggregate Outstanding Credit Exposure at
such time.
"Borrower" means QAD Inc., a Delaware corporation, and its successors and
assigns.
"Borrower Collateral Documents" means, collectively and severally, the
Borrower Security Agreement and each other document, instrument and agreement
delivered by or on behalf of the Borrower pursuant to Section 2.25.
"Borrower Security Agreement" means a pledge and security agreement in the
form of that attached hereto as Exhibit B.
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"Borrowing Base Certificate" means a certificate in the form of that
attached hereto as Exhibit C.
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"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice and/or Conversion/Continuation Request" means a notice
and request in the form of that attached hereto as Exhibit D.
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"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago, Los Angeles and New York for the
conduct of substantially all of their commercial lending activities and on which
dealings in Dollars are carried on in the London interbank market (and, if the
Advances which are the subject of such borrowing, payment or rate selection are
denominated in Euro, a day upon which such clearing system as determined by the
Agent to be suitable for clearing or settlement of the Euro is open for
business) and (ii) for all other purposes, a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities.
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"Capital Expenditures" means, without duplication, any expenditures for any
purchase or other acquisition of any asset which would be classified as a fixed
or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by Standard and Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc. or P-1 or better by Moody's Investors Service, Inc., (iii)
demand deposit accounts maintained in the ordinary course of business, and (iv)
certificates of deposit issued by and time deposits with commercial banks
(whether domestic or foreign) having capital and surplus in excess of
$100,000,000; provided in each case that the same provides for payment of both
principal and interest (and not principal alone or interest alone) and is not
subject to any contingency regarding the payment of principal or interest.
"Change in Control" means: (i) if Pamela Lopker and Karl Lopker shall
cease to own, free and clear of all Liens or other encumbrances, at least 40% of
the outstanding shares of voting stock of the Borrower on a fully diluted basis,
or (ii) if Pamela Lopker and Karl Lopker shall cease to manage and direct the
day to day operations of the Borrower and its Subsidiaries, or (iii) the
acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 50% or more of
the outstanding shares of voting stock of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Shortfall Amount" is defined in Section 8.1.
"Collateral Value of the Borrowing Base" means on any date: (i) 85% of the
unpaid principal balance (net of any credit balance, trade discount or unbilled
amount or retention) of all Eligible Accounts on such date, plus (ii) during the
period from the date of this Agreement to and including October 18, 2000,
$4,000,000.
"Collateral Value of the Related Facility Borrowing Base" with respect to
any Related Facility Agreement, has the meaning given such term in such Related
Facility Agreement.
"Combined Credit Facilities Documents" is defined in Section 10.1 below.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans to, and participate in Facility LCs issued upon the application of, the
Borrower hereunder and to make Related Facility Loans under the Related Facility
Credit Agreements in an aggregate amount not exceeding the amount set forth
opposite its signature below or as set forth in any Assignment Agreement
relating to any assignment that has become effective pursuant to Section 12.3.2,
as such amount may be modified from time to time pursuant to the terms hereof.
"Compliance Certificate" means a certificate in the form of that attached
hereto as Exhibit E.
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"Computation Date" means each day upon or as of which the Agent determines
Dollar Amounts as required pursuant to Section 2.7(iii).
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"Consolidated Capital Expenditures" means, with reference to any period,
the Capital Expenditures of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated EBITDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation,
(iv) amortization and (v) extraordinary losses incurred other than in the
ordinary course of business, minus, to the extent included in Consolidated Net
Income, extraordinary gains realized other than in the ordinary course of
business, all calculated for the Borrower and its Subsidiaries on a consolidated
basis.
"Consolidated Funded Indebtedness" means at any time the aggregate dollar
amount of Consolidated Indebtedness which has actually been funded and is
outstanding at such time, whether or not such amount is due or payable at such
time.
"Consolidated Indebtedness" means at any time the Indebtedness of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time.
"Consolidated Interest Expense" means, with reference to any period, the
interest expense of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Worth" means at any time the consolidated stockholders'
equity of the Borrower and its Subsidiaries calculated on a consolidated basis
as of such time.
"Consolidated Rentals" means, with reference to any period, the Rentals of
the Borrower and its Subsidiaries calculated on a consolidated basis for such
period.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.
"Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes.
"Cost Rate" means the cost of complying with the requirements of
authorities in the applicable jurisdictions outside of the United States of
America with respect to the funding of Advances in the applicable Agreed
Currency in that jurisdiction, as determined by the Agent consistent with its
customary practices, policies and procedures, with the methodology for
calculating the "Cost Rate" with respect to Advances funded in British Pounds
Sterling as in effect on the initial Credit Extension Date being set forth on
Supplemental Schedule I attached hereto.
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"Credit Extension" means the making of an Advance or the issuance of a
Facility LC hereunder.
"Credit Extension Date" means the Borrowing Date for an Advance or the
issuance date for a Facility LC.
"Default" means an event described in Article VII.
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"Dollar Amount" of any currency at any date shall mean (i) the amount of
such currency if such currency is Dollars or (ii) the Equivalent Amount of
Dollars if such currency is any currency other than Dollars, calculated on the
basis of the arithmetical mean of the buy and sell spot rates of exchange of the
Agent for such currency on the London market at 11:00 a.m., London time, on or
as of the most recent Computation Date.
"Dollars" and "$" shall mean the lawful currency of the United States of
America.
"Eligible Account" means an account receivable of the Borrower for which
each of the following statements is accurate and complete (and the Borrower by
including such account receivable in any computation of the Borrowing Base shall
be deemed to so represent and warrant to the Agent and the Lenders):
(i) Said account receivable is a binding and valid obligation of the
obligor thereon, in full force and effect and enforceable in
accordance with its terms.
(ii) Said account receivable is genuine, in all respects as appearing on
its face or as represented in the books and records of the Borrower,
and all information set forth therein is true and correct.
(iii) Said account receivable is free of all default of any party thereto,
counterclaims, and, to the knowledge of the Borrower, offsets and
defenses, and from any rescission, cancellation or avoidance, and
all right thereof, whether by operation of law or otherwise.
(iv) The payment of said account receivable is not more than 60 days past
due the due date therefor and the due date of such payment is not
more than 365 days following the invoice date thereof.
(v) Said account receivable is free of concessions or understandings
with the obligor thereon of any kind not disclosed to and approved
by the Agent in writing.
(vi) Said account receivable is, and at all times will be, free and clear
of all liens, encumbrances, charges, rights and interests of any
kind, except a first priority, perfected security interest in favor
of the Agent for the benefit of the Lenders.
(vii) Said account receivable is derived from sales made or services
rendered to the obligor in the ordinary course of the Borrower's
business (other than the sale of minerals or the like, including oil
and gas, at the wellhead or minehead).
(viii) The obligor on said account receivable (a) is located within the
United Sates of America or the District of Columbia, Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Ireland, Italy, Japan, Spain, Sweden, Switzerland, The Netherlands
or United Kingdom; (b) is not the subject of any bankruptcy or
insolvency proceeding, nor has a trustee or receiver been appointed
for all or a substantial part of its property, nor has said obligor
made an assignment for the benefit of creditors, admitted its
inability to pay its debts as they mature or suspended its business;
(c) is not affiliated, directly or indirectly, with the Borrower, as
a Subsidiary or other Affiliate, employee or otherwise; and (d) is
not a state or federal governmental department, commission, board,
bureau or agency.
(ix) Said account receivable did not arise from sales to an obligor as to
whom 25% or more of the total accounts receivable owing by such
obligor to the Borrower are delinquent more than 60 days from the
due date thereof.
(x) Said account receivable did not arise from sales to an obligor whose
total accounts receivable owing to the Borrower and its Subsidiaries
constitute more than 5% of all of the Borrower's and such
Subsidiaries' outstanding accounts receivable.
Page 6
(xi) Said account receivable is otherwise satisfactory to the Agent, in
its reasonable credit judgment.
"Eligible Currency" means any currency other than Dollars (i) that is
readily available, (ii) that is freely traded, (iii) in which deposits are
customarily offered to banks in the London interbank market, (iv) which is
convertible into Dollars in the international interbank market and (v) as to
which an Equivalent Amount may be readily calculated. If, after the designation
by the Lenders of any currency as an Agreed Currency, (a) currency control or
other exchange regulations are imposed in the country in which such currency is
issued with the result that different types of such currency are introduced, (b)
such currency is, in the determination of the Agent, no longer readily available
or freely traded or (c) in the determination of the Agent, an Equivalent Amount
of such currency is not readily calculable, the Agent shall promptly notify the
Lenders and the Borrower, and such currency shall no longer be an Agreed
Currency until such time as all of the Lenders agree to reinstate such currency
as an Agreed Currency and promptly, but in any event within five Business Days
of receipt of such notice from the Administrative Agent, the Borrower shall
repay all Loans in such affected currency or convert such Loans into Loans in
Dollars or another Agreed Currency, subject to the other terms set forth in
Article II.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (iv)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"Equivalent Amount" of any currency with respect to any amount of Dollars
at any date shall mean the equivalent in such currency of such amount of
Dollars, calculated on the basis of the arithmetical mean of the buy and sell
spot rates of exchange of the Agent for such other currency at 11:00 a.m.,
London time, on the date on or as of which such amount is to be determined.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Euro" means the euro referred to in Council Regulation (EC) No. 1103/97
dated June 17, 1997 passed by the Council of the European Union, or, if
different, the then lawful currency of the member states of the European Union
that participate in the third stage of Economic and Monetary Union.
"Eurocurrency" means any Agreed Currency.
"Eurocurrency Advance" means an Advance which, except as otherwise provided
in Section 2.12, bears interest at the applicable Eurocurrency Rate.
"Eurocurrency Loan" means a Loan which, except as otherwise provided in
Section 2.12, bears interest at the applicable Eurocurrency Rate.
"Eurocurrency Payment Office" of the Agent shall mean, for each of the
Agreed Currencies, the office, branch, affiliate or correspondent bank of the
Agent specified as the "Eurocurrency Payment Office" for such currency from time
to time in a writing delivered by the Agent to the Borrower and each Lender,
with the initial such Eurocurrency Payment Office schedule being delivered to
the Borrower and the Lenders on or before the initial Credit Extension Date.
"Eurocurrency Rate" means, with respect to a Eurocurrency Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurocurrency
Reference Rate applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Interest Period,
plus (ii) the Applicable Margin.
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"Eurocurrency Reference Rate" means, with respect to a Eurocurrency Advance
for the relevant Interest Period: (i) the applicable London interbank offered
rate for deposits in the applicable Agreed Currency appearing on Dow Jones
Markets (Telerate) Page 3750 or 3740, as the case may be, as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
(or, if the Agreed Currency is British Pounds Sterling, as determined by the
Agent in accordance with its customary practice), and having a maturity equal to
such Interest Period, plus (ii) the Cost Rate, provided that, if Dow Jones
Markets (Telerate) Page 3750 or 3740, as the case may be, is not available for
any reason, the applicable Eurocurrency Reference Rate for the relevant Interest
Period shall instead be: (1) the applicable London interbank offered rate for
deposits in the applicable Agreed Currency appearing on Reuters Screen FRBD as
of 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, plus (2)
the Cost Rate.
"Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Lender or the Agent is incorporated or organized or (ii) the jurisdiction
in which the Agent's or such Lender's principal executive office or such
Lender's applicable Lending Installation is located.
"Existing TRW Facility" means the subordinated Indebtedness in the amount
of approximately $12,400,000 issued by QAD Europe BV and QAD Europe Ltd. in
connection with the acquisition of BDM Largotim from TRW Integrated Supply Chain
Solutions.
"Facility LC" is defined in Section 2.21.1.
"Facility LC Application" is defined in Section 2.21.3.
"Facility LC Collateral Account" is defined in Section 2.21.11.
"Facility Termination Date" means April 18, 2002 or any earlier date on
which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Financial Contract" of a Person means (i) any exchange-traded or over-the-
counter futures, forward, swap or option contract or other financial instrument
with similar characteristics, or (ii) any agreements, devices or arrangements
providing for payments related to fluctuations of interest rates, exchange
rates, forward rates or commodity prices, including, but not limited to,
interest rate swap or exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency or
interest rate options.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Floating Rate" means, for any day, a rate per annum equal to the Alternate
Base Rate for such day plus the Applicable Margin, in each case changing when
and as the Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which, except as otherwise
provided in Section 2.12, bears interest at the Floating Rate.
"Floating Rate Loan" means a Loan which, except as otherwise provided in
Section 2.12, bears interest at the Floating Rate.
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"Foreign Subsidiary" means a Subsidiary of the Borrower now existing or
hereafter formed or acquired which Subsidiary is organized under the laws of a
jurisdiction other than the United States of America or a state thereof and the
material portion of the operations of which are conducted outside of the States,
Districts, Territories or Possessions of the United States of America.
"Guaranty" means any guaranty executed by QAD Inc. in favor of the Agent,
for the ratable benefit of the Lenders, delivered in connection with the Related
Facility Agreements, as it may be amended or modified and in effect from time to
time.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
obligations of such Person to purchase securities or other Property arising out
of or in connection with the sale of the same or substantially similar
securities or Property, (vi) Capitalized Lease Obligations, (vii) any other
obligation for borrowed money or other financial accommodation which in
accordance with Agreement Accounting Principles would be shown as a liability on
the consolidated balance sheet of such Person, and (viii) any Contingent
Obligations.
"Interest Period" means, with respect to a Eurocurrency Advance, a period
of one, two, three or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such Person; any
deposit accounts and certificate of deposit owned by such Person; and structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.
"LC Fee" is defined in Section 2.21.4.
"LC Issuer" means First Chicago (or any subsidiary or affiliate of First
Chicago designated by First Chicago) in its capacity as issuer of Facility LCs
hereunder.
"LC Obligations" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn stated amount under all Facility LCs outstanding at such
time plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
"LC Payment Date" is defined in Section 2.21.5.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, the
office, branch, subsidiary or affiliate of such Lender or the Agent with respect
to each Agreed Currency listed on the administrative information sheets provided
to the Agent in connection herewith or otherwise selected by such Lender or the
Agent pursuant to Section 2.19.
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"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, as of any date of calculation, the ratio of (i)
Consolidated Funded Indebtedness outstanding on such date to (ii) Consolidated
EBITDA less Consolidated Capital Expenditures for the Borrower's then most-
recently ended four fiscal quarters.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's loan made pursuant to
Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement, the Facility LC Applications, any
Notes issued pursuant to Section 2.15, the Borrower Collateral Documents and any
additional documents, instruments and agreements executed by the Borrower in
connection herewith or therewith.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents to
which it is a party, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent, the LC Issuer or the Lenders
thereunder.
"Modify" and "Modification" are defined in Section 2.21.1.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"National Currency Unit" means the unit of currency (other than a Euro
unit) of each member state of the European Union that participates in the third
stage of Economic and Monetary Union.
"Non-U.S. Lender" is defined in Section 3.4(iv).
"Note" means any promissory note issued at the request of a Lender pursuant
to Section 2.13 in the form of Exhibit F.
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"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the Borrower to
the Lenders or to any Lender, the Agent, the LC Issuer or any indemnified party
arising under the Loan Documents.
"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"Operating Lease Obligations" means, as at any date of determination, the
amount obtained by aggregating the present values, determined in the case of
each particular Operating Lease by applying a discount rate (which discount rate
shall equal the discount rate which would be applied under Agreement Accounting
Principles if such Operating Lease were a Capitalized Lease) from the date on
which each fixed lease payment is due under such Operating Lease to such date of
determination, of all fixed lease payments due under all Operating Leases of the
Borrower and its Subsidiaries.
"Other Taxes" is defined in Section 3.4(ii).
Page 10
"Outstanding Credit Exposure" means, as to any Lender at any time, the sum
of such Lender's Pro Rata Share of: (i) the aggregate principal amount of Loans
and Related Facility Loans outstanding at such time, plus (ii) the LC
Obligations at such time.
"Parent Collateral Supported Related Facility Loans" means with respect to
each Related Facility Credit Agreement the Dollar Amount of Related Facility
Loans outstanding thereunder in excess of the Collateral Value of the Related
Facility Borrowing Base established under such Related Facility Credit
Agreement.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the first day of each calendar quarter.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Pledged Shares" is defined in Paragraph 3(a) of the Borrower Security
Agreement.
"Pricing Schedule" means the Schedule identified as the "Pricing Schedule"
attached hereto, as such Schedule may be modified in writing by the Borrower,
the Agent and 100% of the Lenders.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Pro Rata Share" means, with respect to a Lender, a portion equal to a
fraction the numerator of which is such Lender's Commitment and the denominator
of which is the Aggregate Commitment.
"Purchasers" is defined in Section 12.3.1.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to, dollar-
denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Section 2.21 to reimburse the
LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
Page 11
"Related Facility Credit Agreement" means a credit agreement which the
Agent and the Lenders, in their sole and absolute discretion, have agreed to
enter into with a Foreign Subsidiary of the Borrower, which credit agreement
recites that it is a "Related Facility Credit Agreement".
"Related Facility Loan" means each "Subsidiary Borrower Loan" advanced
under (and as the term "Subsidiary Borrower Loan" is defined in) each of the
Related Facility Credit Agreement.
"Related Facilities Obligations" means, collectively and severally, all
"Subsidiary Borrower Obligations" under (and as the term "Subsidiary Borrower
Obligations" is defined in) each of the Related Facility Credit Agreements.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 66-2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66-2/3% of the Aggregate Outstanding
credit Exposure.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines
in effect in the United States on the date of this Agreement, including
transition rules, and (ii) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory Practices
Entitled "International Convergence of Capital Measurements and Capital
Standards," including transition rules, and any amendments to such regulations
adopted prior to the date of this Agreement.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Secured Obligations" means, collectively, (i) the Obligations, and (ii)
the Related Facilities Obligations.
"Significant Foreign Subsidiary" means: (i) any now existing or hereafter
arising Subsidiary Borrower, (ii) any now existing and hereafter created or
acquired Foreign Subsidiary which generates 5% or more of the consolidated gross
revenues of the Borrower or holds 5% or more in value of the assets (tangible
and intangible) of the Borrower and its consolidated Subsidiaries, and (iii) any
Foreign Subsidiary otherwise deemed significant to the consolidated operations
of the Borrower and its consolidated Subsidiaries by the Agent in its reasonable
business judgment, with the Significant Foreign Subsidiaries existing on the
date of this Agreement being identified as such on Schedule 5.8 attached hereto.
------------
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Secured
Obligations to the written satisfaction of the Required Lenders.
Page 12
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.
"Subsidiary Borrower" means a Foreign Subsidiary of the Borrower which is
the borrower under a Related Facility Credit Agreement.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or a Eurocurrency Advance.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.
"Year 2000 Issues" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data including dates on and after January 1, 2000, as such inability
affects the business, operations and financial condition of the Borrower and its
Subsidiaries and of the Borrower's and its Subsidiaries' material customers,
suppliers and vendors.
"Year 2000 Program" is defined in Section 5.19.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
Page 13
ARTICLE II
THE CREDIT
----------
2.1. Commitment. From and including the date of this Agreement and
----------
prior to the Facility Termination Date, each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to fund its Pro Rata Share of
Advances to the Borrower in Agreed Currencies and to participate to the extent
of its Pro Rata Share in Facility LCs issued upon the request of the Borrower,
provided that after giving effect to the making of each such Advance and the
issuance of each such Facility LC:
(i) such Lender's Outstanding Credit Exposure shall not exceed the Dollar
Amount of its Commitment;
(ii) the aggregate Dollar Amount of Loans and Facility LCs outstanding
hereunder shall not exceed the lesser of:
(1) the Aggregate Commitment minus the sum of: (a) the aggregate
Dollar Amount of Loans and Facility LCs outstanding hereunder,
plus (b) the aggregate Dollar Amount of Related Facility Loans
outstanding under the Related Facility Credit Agreements, and
(2) Collateral Value of the Borrowing Base minus the sum of: (a) the
aggregate Dollar Amount of Loans and Facility LCs outstanding
hereunder, plus (b) the aggregate Dollar Amount of Parent
Collateral Supported Related Facility Loans outstanding under the
Related Facility Credit Agreements, plus (c) the outstanding
Dollar Amount of Indebtedness permitted under Section 6.11(iv) in
excess of $5,000,000; and
(iii)the aggregate Dollar Amount of Loans outstanding hereunder in
currencies other than the Dollar plus the Dollar Amount of Related
Facility Loans outstanding in currencies other than the Dollar shall
not exceed $20,000,000.
Subject to the terms of this Agreement, the Borrower may borrow, repay and
reborrow at any time prior to the Facility Termination Date. The Commitments to
extend credit hereunder and under the Related Facility Credit Agreements shall
expire on the Facility Termination Date. The LC Issuer will issue Facility LCs
hereunder on the terms and conditions set forth in Section 2.21.
2.2. Required Payments; Termination . Subject to the mandatory
------------------------------
prepayment requirements of Section 2.7(ii) below, all outstanding Loans and all
other unpaid Obligations shall be paid in full by the Borrower on the Facility
Termination Date.
2.3. Ratable Loans . Each Advance hereunder shall consist of Loans made
-------------
from the several Lenders ratably according to their Pro Rata Shares.
2.4. Types of Advances . The Advances may be Floating Rate Advances or
-----------------
Eurocurrency Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9.
2.5. Commitment Fee; Reductions in Aggregate Commitment . The Borrower
--------------------------------------------------
agrees to pay to the Agent for the account of each Lender according to its Pro
Rata Share a commitment fee at a per annum rate equal to the Applicable Fee Rate
on the average daily Available Aggregate Commitment from the date hereof to and
including the Facility Termination Date, said commitment fee to be payable on
each Payment Date hereafter and on the Facility Termination Date. The Borrower
may permanently reduce the Aggregate Commitment in whole, or in part ratably
among the Lenders in integral multiples of $1,000,000 (or the Approximate
Equivalent amount if denominated in an Agreed Currency other than Dollars), upon
at least three Business Days' written notice to the Agent, which notice shall
specify the amount of any such reduction, provided, however, that the amount of
the Aggregate Commitment may not be reduced below the aggregate
Page 14
principal Dollar Amount of the Aggregate Outstanding Credit Exposure. All
accrued commitment fees shall be payable on the effective date of any
termination of the obligations of the Lenders to make Credit Extensions
hereunder. For purposes of calculating the commitment fee hereunder, the
principal amount of each Advance made in an Agreed Currency other than Dollars
shall be at any time the Dollar amount of such Advance as determined on the most
recent Computation Date with respect to such Advance.
2.6. Minimum Amount of Each Advance. Each Eurocurrency Advance shall be
------------------------------
in the minimum amount of $1,000,000 and in multiples of $500,000 if in excess
thereof (or the Approximate Equivalent Amounts if denominated in an Agreed
Currency other than Dollars), and each Floating Rate Advance shall be in the
minimum amount of $1,000,000 and in multiples of $500,000 if in excess thereof,
provided, however, that any Floating Rate Advance may, subject to the
limitations of Section 2.1, be in the amount of the Available Aggregate
Commitment.
2.7. Optional and Mandatory Principal Payments; Determination of Dollar
------------------------------------------------------------------
Amounts. (i) The Borrower may from time to time pay, without penalty or
- -------
premium outstanding Floating Rate Advances in their entirety or portions thereof
in the minimum amount of $1,000,000 and in multiples of $500,000 in excess
thereof upon one Business Day's prior notice to the Agent. The Borrower may from
time to time pay, subject to the payment of any funding indemnification amounts
required by Section 3.3 but without penalty or premium, outstanding Eurocurrency
Advances in their entirety or portions thereof in the minimum amount of
$1,000,000 and in multiples of $500,000 in excess thereof (or the Approximate
Equivalent Amount if denominated in an Agreed Currency other than Dollars), upon
three Business Days' prior notice to the Agent.
(ii) If at any time the Dollar Amount of the sum of the aggregate
principal amount of all outstanding Advances (calculated, with respect to those
Advances denominated in Agreed Currencies other than Dollars, as of the most
recent Computation Date with respect to each such Advance) plus the L/C
Obligations exceeds the amounts permitted under Section 2.1 above, the Borrower
shall immediately repay Advances in an aggregate principal amount sufficient to
eliminate any such excess.
(iii) The Agent will determine the Dollar Amount of:
(a) each Advance as of the date two Business Days prior to the
Borrowing Date or, if applicable, date of
conversion/continuation of such Advance, and
(b) all outstanding Advances on and as of the last Business
Day of each month and on any other Business Day elected by
the Agent in its reasonable discretion or upon instruction
by the Required Lenders.
2.8. Method of Selecting Types and Interest Periods for New Advances. The
---------------------------------------------------------------
Borrower shall select the Type of Advance and, in the case of each Eurocurrency
Advance, the Interest Period and Agreed Currency applicable thereto from time to
time. The Borrower shall give the Agent irrevocable notice pursuant to a duly
executed Borrowing Notice and/or Conversion/Continuation Request not later than
10:00 a.m. (Los Angeles time) at least one Business Day before the Borrowing
Date of each Floating Rate Advance, three Business Days before the Borrowing
Date for each Eurocurrency Advance denominated in Dollars and four Business Days
before the Borrowing Date for each Eurocurrency Advance denominated in an Agreed
Currency other than Dollars, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurocurrency Advance, the Interest Period and
Agreed Currency applicable thereto.
Page 15
Each Borrowing Notice and/or Conversion/Continuation Request presented by the
Borrower shall include any requests for borrowings under the Related Facility
Credit Agreements for the proposed Credit Extension Dates it being acknowledged
and agreed by the Borrower that all borrowing requests presented under the
Related Facility Credit Agreements must be countersigned by the Borrower and
presented by the Borrower to the Agent as provided hereunder. No more than one
Borrowing Notice and/or Conversion/Continuation Request may be presented by the
Borrower on any Business Day and the number of Eurocurrency Advances outstanding
hereunder and under the Related Facility Agreements may not exceed 15 at any
date.
2.9. Conversion and Continuation of Outstanding Advances . Floating Rate
---------------------------------------------------
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into Eurocurrency Advances pursuant to this Section
2.9 or are repaid in accordance with Section 2.7. Each Eurocurrency Advance
shall continue as a Eurocurrency Advance until the end of the then applicable
Interest Period therefor, at which time:
(i) each such Eurocurrency Advance denominated in Dollars shall be
automatically converted into a Floating Rate Advance unless (a) such
Eurocurrency Advance is or was repaid in accordance with Section 2.7
or (b) the Borrower shall have given the Agent a Borrowing Notice
and/or Conversion/Continuation Request requesting that, at the end of
such Interest Period, such Eurocurrency Advance either continue as a
Eurocurrency Advance for the same or another Interest Period or be
converted into a Floating Rate Advance; and
(ii) each such Eurocurrency Advance denominated in an Agreed Currency other
than Dollars shall automatically continue as a Eurocurrency Advance in
the same Agreed Currency with an Interest Period of one month unless
(a) such Eurocurrency Advance is or was repaid in accordance with
Section 2.7 or (b) the Borrower shall have given the Agent a Borrowing
Notice and/or Conversion/Continuation Request requesting that, at the
end of such Interest Period, such Eurocurrency Advance continue as a
Eurocurrency Advance for the same or another Interest Period.
Subject to the terms of Section 2.1, the Borrower may elect from time to time to
convert all or any part of an Advance of any Type into any other Type or Types
of Advances denominated in the same or any other Agreed Currency; provided that
any conversion of any Eurocurrency Advance shall be made on, and only on, the
last day of the Interest Period applicable thereto. The Borrower shall give the
Agent irrevocable notice pursuant to a Borrowing Notice and/or
Conversion/Continuation Request of each conversion of an Advance or continuation
of a Eurocurrency Advance not later than 10:00 a.m. (Los Angeles time) at least
one Business Day, in the case of a conversion into a Floating Rate Advance,
three Business Days, in the case of a conversion into or continuation of a
Eurocurrency Advance denominated in Dollars, or four Business Days, in the case
of a conversion into or continuation of a Eurocurrency Advance denominated in an
Agreed Currency other than Dollars, prior to the date of the requested
conversion or continuation, specifying:
(a) the requested date, which shall be a Business Day, of such conversion
or continuation, and
(b) the Agreed Currency, amount and Type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case of a
conversion into or continuation of a Eurocurrency Advance, the
duration of the Interest Period applicable thereto.
2.10. Method of Borrowing . On each Borrowing Date, each Lender shall
-------------------
make available its Pro Rata Share of Advances, (i) if such Advance is
denominated in Dollars, not later than noon, Chicago time, in Federal or other
funds immediately available to the Agent, in Chicago, Illinois at its address
specified in or pursuant to Article XIII, and (ii) if such Advance is
denominated in an Agreed Currency other than Dollars, not later than noon, local
time, in the city of the Agent's Eurocurrency Payment Office for such currency,
in such funds as may then be customary for the settlement of international
transactions in such currency in the city of and at the address of the Agent's
Eurocurrency Payment Office for such currency. Unless the Agent determines that
any applicable condition specified in Article IV has not been satisfied, the
Agent will make the funds so received from the Lenders available to the Borrower
at the Agent's aforesaid address. Notwithstanding the foregoing provisions of
this Section 2.10, to the extent that a Loan made by a Lender
Page 16
matures on the Borrowing Date of a requested Loan, such Lender shall apply the
proceeds of the Loan it is then making to the repayment of principal of the
maturing Loan.
2.11. Changes in Interest Rate, etc. Each Floating Rate Advance shall
-----------------------------
bear interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically converted from a
Eurocurrency Advance into a Floating Rate Advance pursuant to Section 2.9, to
but excluding the date it is paid or is converted into a Eurocurrency Advance
pursuant to Section 2.9 hereof, at a rate per annum equal to the Floating Rate
for such day. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate. Each Eurocurrency Advance shall bear
interest on the outstanding principal amount thereof from and including the
first day of the Interest Period applicable thereto to (but not including) the
last day of such Interest Period at the interest rate determined by the Agent as
applicable to such Eurocurrency Advance based upon the Borrower's selections
under Sections 2.8 and 2.9 and otherwise in accordance with the terms hereof.
No Interest Period may end after the Facility Termination Date.
2.12. Rates Applicable After Default. Notwithstanding anything to the
------------------------------
contrary contained in Section 2.8 or 2.9, during the continuance of a Default or
Unmatured Default the Required Lenders may, at their option, by notice to the
Borrower, declare that no Advance may be made as, converted into or continued as
a Eurocurrency Advance. During the continuance of a Default the Required
Lenders may, at their option, by notice to the Borrower, declare that (i) each
Eurocurrency Advance shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest Period plus 2%
per annum, (ii) each Floating Rate Advance shall bear interest at a rate per
annum equal to the Floating Rate in effect from time to time plus 2% per annum
and (iii) the LC Fee shall be increased by 2% per annum, provided that, during
the continuance of a Default under Section 7.7, 7.8 or 7.9, the interest rates
set forth in clauses (i) and (ii) above and the increase in the LC Fee set forth
in clause (iii) above shall be applicable to all Credit Extensions without any
election or action on the part of the Agent or any Lender.
2.13. Method of Payment. (i) Each Advance shall be repaid and each
-----------------
payment of interest thereon shall be paid in the currency in which such Advance
was made or, where such currency has converted to the Euro, in the Euro. All
payments of the Obligations hereunder shall be made, without setoff, deduction,
or counterclaim, in immediately available funds to the Agent at (except as set
forth in the next sentence) the Agent's address specified pursuant to Article
XIII, or at any other Lending Installation of the Agent specified in writing by
the Agent to the Borrower, by noon (local time) on the date when due and shall
be applied ratably by the Agent among the Lenders. All payments to be made by
the Borrower hereunder in any currency other than Dollars shall be made in such
currency on the date due in such funds as may then be customary for the
settlement of international transactions in such currency for the account of the
Agent, at its Eurocurrency Payment Office for such currency and shall be applied
ratably by the Agent among the Lenders. Each payment delivered to the Agent for
the account of any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds that the Agent received at, (a) with respect to
Floating Rate Loans and Eurocurrency Loans denominated in Dollars, its address
specified pursuant to Article XIII or at any Lending Installation specified in a
notice received by the Agent from such Lender and (b) with respect to
Eurocurrency Loans denominated in an Agreed Currency other than Dollars, in the
funds received from the Borrower at the address of the Agent's Eurocurrency
Payment Office for such currency. The Agent is hereby authorized to charge any
account of the Borrower maintained with First Chicago or any of its Affiliates
for each payment of principal, interest and fees as it becomes due hereunder.
(ii) Notwithstanding the foregoing provisions of this Section, if, after
the making of any Advance in any currency other than Dollars, currency control
or exchange regulations are imposed in the country which issues such currency
with the result that the type of currency in which the Advance was made (the
"Original Currency") no longer exists or the Borrower is not able to make
payment to the Agent for the account of the Lenders in such Original Currency,
then all payments to be made by the Borrower hereunder in such currency shall
instead be made when due in Dollars in an amount equal to the Dollar Amount (as
of the date of repayment) of such payment due, it being the intention of the
parties hereto that the Borrower take all risks of the imposition of any such
currency control or exchange regulations. For purposes of this Section
2.13(ii), the commencement of the third stage of European Economic and Monetary
Union and the occurrence of the Euro Implementation Date shall not constitute
the imposition of currency control or exchange regulations.
Page 17
2.14. European Economic and Monetary Union. If any Advance made (or to
------------------------------------
be made) would, but for the provisions of this Section 2.14, be capable of being
made in either the Euro or in a National Currency Unit, such Advance shall be
made in the Euro. Without prejudice to any method of conversion or rounding
prescribed by any legislative measures of the Council of the European Union,
each reference in this Agreement to a fixed amount or to fixed amounts in a
National Currency Unit to be paid to or by the Agent shall, notwithstanding any
other provision of this Agreement, be replaced by a reference to such comparable
and convenient fixed amount or fixed amounts in the Euro as the Agent may from
time to time specify. The Agent may notify the other parties to this Agreement
of any modifications to this Agreement which the Agent (acting reasonably and
after consultation with the other parties to this Agreement) determines to be
necessary as a result of in relation to the agreement of the Lenders hereunder
to include the Euro as an Eligible Currency. Notwithstanding any other
provision of this Agreement, any modifications of which the Agent so notifies
the other parties shall take effect in accordance with the terms of such
notification.
2.15. Noteless Agreement; Evidence of Indebtedness. (i) Each Lender shall
--------------------------------------------
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(ii) The Agent shall also maintain accounts in which it will record (a)
the amount of each Loan made hereunder, the Type thereof and the Interest Period
with respect thereto, (b) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
(c) the original stated amount of each Facility LC and the amount of LC
Obligations outstanding at any time, and (d) the amount of any sum received by
the Agent hereunder from the Borrower and each Lender's share thereof.
(iii) The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the failure
of the Agent or any Lender to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Obligations
in accordance with their terms.
(iv) Any Lender may request that its Loans be evidenced by a promissory
note (a "Note"). In such event, the Borrower shall prepare, execute and deliver
to such Lender a Note payable to the order of such Lender in a form supplied by
the Agent. Thereafter, the Loans evidenced by such Note and interest thereon
shall at all times (including after any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee named therein
or any assignee pursuant to Section 12.3, except to the extent that any such
Lender or assignee subsequently returns any such Note for cancellation and
requests that such Loans once again be evidenced as described in paragraphs (i)
and (ii) above.
2.16. Presumed Authorization; Telephonic Notices. The Borrower hereby
------------------------------------------
authorizes the Lenders and the Agent to extend, convert or continue Advances,
effect selections of Agreed Currencies and Types of Advances and to transfer
funds based on notices made by facsimile transmission by any person or persons
the Agent or any Lender in good faith believes to be acting on behalf of the
Borrower. In the event the Agent, in its sole and absolute discretion, agrees
to accept any such notices by telephonic transmission, the Borrower hereby
authorizes the Agent to do so and to take the requested action if the Agent in
good faith believes the person providing such notice is acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender, of
each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the Agent
and the Lenders, the records of the Agent and the Lenders shall govern absent
manifest error.
2.17. Interest Payment Dates; Interest and Fee Basis. Interest accrued
----------------------------------------------
on each Floating Rate Advance shall be payable in arrears on the first day of
each calendar month, on any date on which such Floating Rate is prepaid, whether
upon mandatory prepayment, by acceleration or otherwise, and at maturity.
Interest accrued on each Eurocurrency Advance shall be payable on the last day
of its applicable Interest Period, on any date on which the Eurocurrency Advance
is prepaid, whether upon mandatory prepayment, by acceleration or otherwise, and
at maturity. Interest accrued on each Eurocurrency Advance having an Interest
Period longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest on Eurocurrency
Advances (other than interest on Eurocurrency Advances
Page 18
denominated in British Pounds Sterling), commitment fees and LC Fees shall be
calculated for actual days elapsed on the basis of a 360-day year. Interest on
Floating Rate Loans and Eurocurrency Loans denominated in British Pounds
Sterling shall be calculated for actual days elapsed on the basis of a 365/6-day
year. Interest shall be payable for the day an Advance is made but not for the
day of any payment on the amount paid if payment is received prior to noon
(local time) at the place of payment. If any payment of principal of or interest
on an Advance shall become due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.18. Notification of Advances, Interest Rates, Prepayments and Commitment
--------------------------------------------------------------------
Reductions. Promptly after receipt thereof, the Agent will notify each Lender
- ----------
of the contents of each Aggregate Commitment reduction notice and Borrowing
Notice and/or Conversion/Continuation Request, and repayment notice received by
it hereunder. Promptly after notice from the LC Issuer, the Agent will notify
each Lender of the contents of each request for issuance of a Facility LC
hereunder. The Agent will notify each Lender of the interest rate applicable to
each Eurocurrency Advance promptly upon determination of such interest rate and
will give each Lender prompt notice of each change in the Alternate Base Rate.
2.19. Lending Installations. Each Lender will book its Loans and its
---------------------
participation in any LC Obligations and the LC Issuer will book the Facility LCs
at the appropriate Lending Installation listed on the administrative information
sheets provided to the Agent in connection herewith or such other Lending
Installation designated by such Lender or the LC Issuer, as the case may be, in
accordance with the final sentence of this Section. All terms of this Agreement
shall apply to any such Lending Installation and the Loans, Facility LCs,
participations in LC Obligations and any Notes issued hereunder shall be deemed
held by each Lender or the LC Issuer, as the case may be, for the benefit of any
such Lending Installation. Each Lender and the LC Issuer may, by written notice
to the Agent and the Borrower in accordance with Article XIII, designate
replacement or additional Lending Installations through which Loans will be made
by it or Facility LCs will be issued by it and for whose account Loan payments
or payments with respect to Facility LCs are to be made.
2.20. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
---------------------------------
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (a) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (b) in the case
of payment by the Borrower, the interest rate applicable to the relevant Loan.
2.21. Facility LCs.
------------
2.21.1. Issuance. The LC Issuer hereby agrees, on the terms and
--------
conditions set forth in this Agreement, to issue standby letters of credit
(each, a "Facility LC") and to renew, extend, increase, decrease or
otherwise modify each Facility LC ("Modify," and each such action a
"Modification"), from time to time from and including the date of this
Agreement and prior to the Facility Termination Date upon the request of
the Borrower; provided that immediately after each such Facility LC is
issued or Modified: (i) the aggregate amount of the outstanding LC
Obligations shall not exceed $10,000,000, and (ii) the Borrower shall be in
compliance with the limitations of Section 2.1. No Facility LC shall have
an expiry date later than the earlier of (a) the first anniversary of the
issuance date thereof and (b) the fifth Business Day prior to the Facility
Termination Date; provided, however, that any Facility LC with an expiry
date complying with the requirements of subsection (a) may provide for the
automatic renewal thereof for additional one year periods subject to the
requirements of subsection (b) above.
Page 19
2.21.2. Participations. Upon the issuance or Modification by the LC
--------------
Issuer of a Facility LC in accordance with this Section 2.21, the LC Issuer
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably sold to each Lender, and each Lender shall
be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the LC Issuer, a
participation in such Facility LC (and each Modification thereof) and the
related LC Obligations in proportion to its Pro Rata Share.
2.21.3. Notice. Subject to Section 2.21.1, the Borrower shall give
------
the LC Issuer notice prior to 10:00 a.m. (Los Angeles time) at least five
Business Days prior to the proposed date of issuance or Modification of
each Facility LC, specifying the beneficiary, the proposed date of issuance
(or Modification) and the expiry date of such Facility LC, and describing
the proposed terms of such Facility LC and the nature of the transactions
proposed to be supported thereby. Upon receipt of such notice, the LC
Issuer shall promptly notify the Agent, and the Agent shall promptly notify
each Lender, of the contents thereof and of the amount of such Lender's
participation in such proposed Facility LC. The issuance or Modification by
the LC Issuer of any Facility LC shall, in addition to the conditions
precedent set forth in Article IV (the satisfaction of which the LC Issuer
shall have no duty to ascertain), be subject to the conditions precedent
that such Facility LC shall be satisfactory to the LC Issuer and that the
Borrower shall have executed and delivered such application agreement
and/or such other instruments and agreements relating to such Facility LC
as the LC Issuer shall have reasonably requested (each, a "Facility LC
Application"). In the event of any conflict between the terms of this
Agreement and the terms of any Facility LC Application, the terms of this
Agreement shall control.
2.21.4. LC Fees. The Borrower shall pay to the Agent, for the account of
-------
the Lenders ratably in accordance with their respective Pro Rata Shares, a
letter of credit fee at a per annum rate equal to the Applicable Margin for
Eurocurrency Loans in effect from time to time on the average daily undrawn
stated amount under such Facility LC, such fee to be payable in arrears on
each Payment Date (an "LC Fee"). The Borrower shall also pay to the LC
Issuer for its own account (i) at the time of issuance of each Facility LC
and at the effective date of any extension thereof, a fronting fee equal to
0.125% of the face amount of such Facility LC, and (ii) documentary and
processing charges in connection with the issuance or Modification of and
draws under Facility LCs in accordance with the LC Issuer's standard
schedule for such charges as in effect from time to time.
2.21.5. Administration; Reimbursement by Lenders. Upon receipt from
----------------------------------------
the beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Agent and the Agent shall
promptly notify the Borrower and each other Lender as to the amount to be
paid by the LC Issuer as a result of such demand and the proposed payment
date (the "LC Payment Date"). The responsibility of the LC Issuer to the
Borrower and each Lender shall be only to determine that the documents
(including each demand for payment) delivered under each Facility LC in
connection with such presentment shall be in conformity in all material
respects with such Facility LC. The LC Issuer shall endeavor to exercise
the same care in the issuance and administration of the Facility LCs as it
does with respect to letters of credit in which no participations are
granted, it being understood that in the absence of any gross negligence or
willful misconduct by the LC Issuer, each Lender shall be unconditionally
and irrevocably liable without regard to the occurrence of any Default or
any condition precedent whatsoever, to reimburse the LC Issuer on demand
for (i) such Lender's Pro Rata Share of the amount of each payment made by
the LC Issuer under each Facility LC to the extent such amount is not
reimbursed by the Borrower pursuant to Section 2.21.6 below, plus (ii)
interest on the foregoing amount to be reimbursed by such Lender, for each
day from the date of the LC Issuer's demand for such reimbursement (or, if
such demand is made after 10:00 a.m. (Los Angeles time) on such date, from
the next succeeding Business Day) to the date on which such Lender pays the
amount to be reimbursed by it, at a rate of interest per annum equal to the
Federal Funds Effective Rate for the first three days and, thereafter, at a
rate of interest equal to the rate applicable to Floating Rate Advances.
2.21.6. Reimbursement by Borrower. The Borrower shall be irrevocably and
-------------------------
unconditionally obligated to reimburse the LC Issuer on or before the
applicable LC Payment Date
Page 20
for any amounts to be paid by the LC Issuer upon any drawing under any
Facility LC, without presentment, demand, protest or other formalities of
any kind; provided that neither the Borrower nor any Lender shall hereby be
precluded from asserting any claim for direct (but not consequential)
damages suffered by the Borrower or such Lender to the extent, but only to
the extent, caused by (i) the willful misconduct or gross negligence of the
LC Issuer in determining whether a request presented under any Facility LC
issued by it complied with the terms of such Facility LC or (ii) the LC
Issuer's failure to pay under any Facility LC issued by it after the
presentation to it of a request strictly complying with the terms and
conditions of such Facility LC. All such amounts paid by the LC Issuer and
remaining unpaid by the Borrower shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to (a) the rate
applicable to Floating Rate Advances for such day if such day falls on or
before the applicable LC Payment Date and (b) the sum of 2% plus the rate
applicable to Floating Rate Advances for such day if such day falls after
such LC Payment Date. The LC Issuer will pay to each Lender ratably in
accordance with its Pro Rata Share all amounts received by it from the
Borrower for application in payment, in whole or in part, of the
Reimbursement Obligation in respect of any Facility LC issued by the LC
Issuer, but only to the extent such Lender has made payment to the LC
Issuer in respect of such Facility LC pursuant to Section 2.21.5. Subject
to the terms and conditions of this Agreement (including without limitation
the submission of a Borrowing Notice and/or Conversion/Continuation Request
in compliance with Section 2.8 and the satisfaction of the applicable
conditions precedent set forth in Article IV), the Borrower may request an
Advance hereunder for the purpose of satisfying any Reimbursement
Obligation.
2.21.7. Obligations Absolute. The Borrower's obligations under this
--------------------
Section 2.21 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the LC Issuer, any
Lender or any beneficiary of a Facility LC. The Borrower further agrees
with the LC Issuer and the Lenders that the LC Issuer and the Lenders shall
not be responsible for, and the Borrower's Reimbursement Obligation in
respect of any Facility LC shall not be affected by, among other things,
the validity or genuineness of documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among the
Borrower, any of its Affiliates, the beneficiary of any Facility LC or any
financing institution or other party to whom any Facility LC may be
transferred or any claims or defenses whatsoever of the Borrower or of any
of its Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message
or advice, however transmitted, in connection with any Facility LC. The
Borrower agrees that any action taken or omitted by the LC Issuer or any
Lender under or in connection with each Facility LC and the related drafts
and documents, if done without gross negligence or willful misconduct,
shall be binding upon the Borrower and shall not put the LC Issuer or any
Lender under any liability to the Borrower. Nothing in this Section 2.21.7
is intended to limit the right of the Borrower to make a claim against the
LC Issuer for damages as contemplated by the proviso to the first sentence
of Section 2.21.6.
2.21.8. Actions of LC Issuer. The LC Issuer shall be entitled to
--------------------
rely, and shall be fully protected in relying, upon any Facility LC, draft,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order
or other document reasonably believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the LC Issuer. The LC Issuer shall be fully justified
in failing or refusing to take any action under this Agreement unless it
shall first have received such advice or concurrence of the Required
Lenders as it reasonably deems appropriate or it shall first be indemnified
to its reasonable satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing
to take any such action. Notwithstanding any other provision of this
Section 2.21, the LC Issuer shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance
with a request of the Required Lenders, and such request and any action
taken or failure to act pursuant thereto shall be binding upon the Lenders
and any future holders of a participation in any Facility LC.
2.21.9. Indemnification. The Borrower hereby agrees to indemnify and
hold harmless each
Page 21
Lender, the LC Issuer and the Agent, and their respective directors,
officers, agents and employees from and against any and all claims and
damages, losses, liabilities, costs or expenses which such Lender, the LC
Issuer or the Agent may incur (or which may be claimed against such Lender,
the LC Issuer or the Agent by any Person whatsoever) by reason of or in
connection with the issuance, execution and delivery or transfer of or
payment or failure to pay under any Facility LC or any actual or proposed
use of any Facility LC, including, without limitation, any claims, damages,
losses, liabilities, costs or expenses which the LC Issuer may incur by
reason of or in connection with (i) the failure of any other Lender to
fulfill or comply with its obligations to the LC Issuer hereunder (but
nothing herein contained shall affect any rights the Borrower may have
against any defaulting Lender) or (ii) by reason of or on account of the LC
Issuer issuing any Facility LC which specifies that the term "Beneficiary"
included therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by any
such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the LC Issuer, evidencing the appointment of such successor
Beneficiary; provided that the Borrower shall not be required to indemnify
any Lender, the LC Issuer or the Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent,
caused by (a) the willful misconduct or gross negligence of the LC Issuer
in determining whether a request presented under any Facility LC complied
with the terms of such Facility LC or (b) the LC Issuer's failure to pay
under any Facility LC after the presentation to it of a request strictly
complying with the terms and conditions of such Facility LC. Nothing in
this Section 2.21.9 is intended to limit the obligations of the Borrower
under any other provision of this Agreement.
2.21.10. Lenders' Indemnification. Each Lender shall, ratably in
------------------------
accordance with its Pro Rata Share, indemnify the LC Issuer, its affiliates
and their respective directors, officers, agents and employees (to the
extent not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct or the LC Issuer's failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms
and conditions of the Facility LC) that such indemnitees may suffer or
incur in connection with this Section 2.21 or any action taken or omitted
by such indemnitees hereunder.
2.21.11. Facility LC Collateral Account. The Borrower agrees that it
------------------------------
will, upon the request of the Agent or the Required Lenders made at any
time following the occurrence of a Default and until the final expiration
date of any Facility LC and thereafter as long as any amount is payable to
the LC Issuer or the Lenders in respect of any Facility LC, maintain a
special collateral account pursuant to arrangements satisfactory to the
Agent (the "Facility LC Collateral Account") at the Agent's office at the
address specified pursuant to Article XIII, in the name of such Borrower
but under the sole dominion and control of the Agent, for the benefit of
the Lenders and in which such Borrower shall have no interest other than as
set forth in Section 8.1. The Borrower hereby pledges, assigns and grants
to the Agent, on behalf of and for the ratable benefit of the Lenders and
the LC Issuer, a security interest in all of the Borrower's right, title
and interest in and to all funds which may from time to time be on deposit
in the Facility LC Collateral Account to secure the prompt and complete
payment and performance of the Obligations. The Agent will invest any funds
on deposit from time to time in the Facility LC Collateral Account in
certificates of deposit of First Chicago having a maturity not exceeding 30
days. Nothing in this Section 2.21.11 shall either obligate the Agent to
require the Borrower to deposit any funds in the Facility LC Collateral
Account or limit the right of the Agent to release any funds held in the
Facility LC Collateral Account in each case other than as required by
Section 8.1.
2.21.12. Rights as a Lender. In its capacity as a Lender, the LC
------------------
Issuer shall have the same rights and obligations as any other Lender.
2.22. Replacement of Lender. If the Borrower is required pursuant
---------------------
to Section 3.1 or 3.4 of this Agreement or if any Subsidiary Borrower is
required pursuant to Sections 3.1 or 3.4 of any Related Facility Credit
Agreement to make any additional payment to any Lender or if any Lender's
obligation to make or continue, or to convert Floating Rate Advances into,
Eurocurrency Advances shall be suspended pursuant to Section 3.3 (any
Lender so affected an "Affected Lender"), the Borrower may elect, if such
amounts continue
Page 22
to be charged or such suspension is still effective, to replace such
Affected Lender as a Lender party to this Agreement and all Related
Facility Credit Agreements, provided that no Default or Unmatured Default
shall have occurred and be continuing at the time of such replacement, and
provided further that, concurrently with such replacement, (i) another bank
or other entity which is reasonably satisfactory to the Borrower and the
Agent shall agree, as of such date, to purchase for cash the Advances and
other Obligations due to the Affected Lender pursuant to an Assignment
Agreement and to become a Lender for all purposes under this Agreement, to
purchase for cash the "Subsidiary Borrower Advances" and "Subsidiary
Borrower Obligations" under (and as defined in each of the Related Facility
Credit Agreements) and to assume all obligations of the Affected Lender to
be terminated as of such date and to comply with the requirements of
Section 12.3 applicable to assignments, and (ii) the Borrower shall pay to
such Affected Lender in same day funds on the day of such replacement all
interest, fees and other amounts then accrued but unpaid to such Affected
Lender by the Borrower hereunder and under each of the Related Facility
Credit Agreements to and including the date of termination, including
without limitation payments due to such Affected Lender under Sections 3.1
and 3.4 of this Agreement and each of the Related Facility Credit
Agreements.
2.23. Market Disruption. Notwithstanding the satisfaction of all
-----------------
conditions referred to in Article II and Article IV with respect to any
Advance in any Agreed Currency other than Dollars, if there shall occur on
or prior to the date of such Advance any change in national or
international financial, political or economic conditions or currency
exchange rates or exchange controls which would in the reasonable opinion
of the Agent or the Required Lenders make it impracticable for the
Eurocurrency Loans comprising such Advance to be denominated in the Agreed
Currency specified by the Borrower, then the Agent shall forthwith give
notice thereof to the Borrower and the Lenders, and such Loans shall not be
denominated in such Agreed Currency but shall, except as otherwise set
forth in Section 2.14, be made on such Borrowing Date in Dollars, in an
aggregate principal amount equal to the Dollar Amount of the aggregate
principal amount specified in the related Borrowing Notice and/or
Conversion/Continuation Request as Floating Rate Loans, unless the Borrower
notifies the Agent at least one Business Day before such date that (i) it
elects not to borrow on such date or (ii) it elects to borrow on such date
in a different Agreed Currency, as the case may be, in which the
denomination of such Loans would in the opinion of the Agent and the
Required Lenders be practicable and in an aggregate principal amount equal
to the Dollar Amount of the aggregate principal amount specified in the
related Borrowing Notice and/or Conversion/Continuation Request.
2.24. Judgment Currency. If for the purposes of obtaining judgment
-----------------
in any court it is necessary to convert a sum due from the Borrower
hereunder in the currency expressed to be payable herein (the "specified
currency") into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Agent could purchase the specified currency with such other currency at the
Agent's main Chicago office on the Business Day preceding that on which
final, non-appealable judgment is given. The obligations of the Borrower in
respect of any sum due to any Lender or the Agent hereunder shall,
notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day
following receipt by such Lender or the Agent (as the case may be) of any
sum adjudged to be so due in such other currency such Lender or the Agent
(as the case may be) may in accordance with normal, reasonable banking
procedures purchase the specified currency with such other currency. If the
amount of the specified currency so purchased is less than the sum
originally due to such Lender or the Agent, as the case may be, in the
specified currency, the Borrower agrees, to the fullest extent that it may
effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify such Lender or the Agent, as the case may be,
against such loss, and if the amount of the specified currency so purchased
exceeds (a) the sum originally due to any Lender or the Agent, as the case
may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate
payment to such Lender under Section 12.2, such Lender or the Agent, as the
case may be, agrees to remit such excess to the Borrower.
2.25. Collateral Security. As collateral security for the Secured
-------------------
Obligations, on or before the first Credit Extension and as a condition
precedent thereto, the Borrower shall execute and deliver, and shall cause
to be executed and delivered, to the Agent for the benefit of the Lenders:
(i) the Borrower Security Agreement pursuant to which the Borrower shall
grant to the Agent for the benefit of the Lenders a first priority
perfected security interest in and lien upon the collateral described
therein, including, without limitation: (a) all now owned and hereafter
acquired capital stock of all directly owned Subsidiaries of the Borrower
which are not Foreign Subsidiaries, (b) 66% of all now owned and hereafter
acquired voting stock of all Subsidiary
Page 23
Borrowers, and (c) 66% of all now owned and hereafter acquired voting stock of
all Significant Foreign Subsidiaries which are not Subsidiary Borrowers, and
(ii) such additional documents, instruments and agreements, including, without
limitation, UCC-1 financing statements, original stock certificates and stock
transfer powers, and acknowledgments, consents of and notices to third parties,
as the Agent may reasonably require. No later than 30 days following the
initial Credit Extension Date the Borrower will: (a) cause to be delivered to
the Agent opinions in form and substance and provided by counsel satisfactory to
the Agent licensed to practice in jurisdictions in which the Subsidiary
Borrowers and all Significant Foreign Subsidiaries which are not Subsidiary
Borrowers are organized setting forth any requirements of such jurisdictions
relating to the pledge of the stock of such entities by the Borrower, including,
without limitation, requirements relating to the exercise of remedies by the
Agent with respect thereto following the occurrence of a Default, and (b) take
such actions as may be required to assure that the Agent for the benefit of the
Lenders has a first priority perfected security interest in all deposit accounts
described on Schedule 2 to the Borrower Security Agreement. Following the first
----------
Credit Extension the Borrower shall execute and deliver and shall cause to be
executed and delivered from time to time such confirmatory and supplementary
security agreements, financing statements, acknowledgments, consents of and
notices to third parties and such other documents, instruments and agreements as
the Agent may reasonably require to obtain and maintain for the Agent and the
Lenders the benefit of the Loan Documents. Without limiting the generality of
the foregoing, it is expressly acknowledged and agreed by the Borrower that the
Borrower will provide written notice to the Agent of the acquisition or
formation of any Subsidiary following the initial Credit Extension Date no later
than 5 Business Days following the consummation of such acquisition or formation
and promptly provide or cause to be provided to the Agent pursuant to the
applicable Subsidiary Borrower Security Agreement: (a) in the case of a
Subsidiary which is not a Foreign Subsidiary, all stock certificates evidencing
the capital stock of such Subsidiary, and (b) with respect to each Subsidiary
which is a Subsidiary Borrower or a Significant Foreign Subsidiary which is not
a Subsidiary Borrower, 66% of all now owned and hereafter acquired voting stock
of such Subsidiary, and (c) such additional documents, instruments and
agreements, including, without limitation, UCC-1 financing statements, original
stock certificates and stock transfer powers, and acknowledgments, consents of
and notices to third parties, as the Agent may reasonably require.
ARTICLE III
YIELD PROTECTION; TAXES
-----------------------
3.1. Yield Protection. If, on or after the date of this Agreement, the
----------------
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation or the LC Issuer with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or any applicable Lending Installation or the LC
Issuer to any Taxes, or changes the basis of taxation of payments
(other than with respect to Excluded Taxes) to any Lender or the LC
Issuer in respect of its Eurocurrency Loans, Facility LCs or
participations therein, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by,
any Lender or any applicable Lending Installation or the LC Issuer
(other than reserves and assessments taken into account in determining
the interest rate applicable to Eurocurrency Advances), including,
without limitation, a change in the amount of capital required or
expected to be maintained by any Lender or the LC Issuer or any
Lending Installation of any Lender as a result in a change in the
Risk-Based Capital Guidelines, or
(iii) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation or the LC
Issuer of making, funding or maintaining its Eurocurrency Loans
(including, without limitation, any conversion of any Loan denominated
Page 24
in an Agreed Currency other than Euro into a Loan denominated in
Euro), or of issuing or participating in Facility LCs or reduces any
amount receivable by any Lender or any applicable Lending Installation
or the LC Issuer in connection with its Eurocurrency Loans, Facility
LCs or participations therein or requires any Lender or any applicable
Lending Installation or the LC Issuer to make any payment calculated
by reference to the amount of Eurocurrency Loans, Facility LCs or
participations therein held or interest or LC Fees received by it, by
an amount deemed material by such Lender or the LC Issuer as the case
may be,
and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation or the LC Issuer, as the case may be, of making
or maintaining its Eurocurrency Loans (including, without limitation, any
conversion of any Loan denominated in an Agreed Currency other than Euro into a
Loan denominated in Euro) or Commitment or of issuing or participating in
Facility LCs or to reduce the return received by such Lender or applicable
Lending Installation or to the LC Issuer, as the case may be, in connection with
such Eurocurrency Loans, its Commitment, Facility LCs or participations therein,
then, within 15 days of demand by such Lender or the LC Issuer, as the case may
be, the Borrower shall pay such Lender or the LC Issuer, as the case may be,
such additional amount or amounts as will compensate such Lender or the LC
Issuer, as the case may be, for such increased cost or reduction in amount
received.
3.2. Availability of Types of Advances. If any Lender reasonably
---------------------------------
determines that maintenance of its Eurocurrency Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if the Required Lenders determine
that (i) deposits of a type, currency and maturity appropriate to match fund
Eurocurrency Advances are not available or (ii) the interest rate applicable to
Eurocurrency Advances does not accurately reflect the cost of making or
maintaining Eurocurrency Advances, then the Agent shall suspend the availability
of Eurocurrency Advances and require any affected Eurocurrency Advances to be
repaid or converted to Floating Rate Advances, subject to the payment of any
funding indemnification amounts required by Section 3.3.
3.3. Funding Indemnification. If any payment of a Eurocurrency Advance
-----------------------
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurocurrency
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower will indemnify each Lender for any
loss or cost incurred by it resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund or
maintain such Eurocurrency Advance.
3.4. Taxes. (i) All payments by the Borrower to or for the account of
-----
any Lender, the LC Issuer or the Agent hereunder or under any Note or Facility
LC Application shall be made free and clear of and without deduction for any and
all Taxes. If the Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to any Lender, the LC Issuer or the
Agent, (a) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 3.4) such Lender, the LC Issuer or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (b) the Borrower shall make such deductions, (c) the
Borrower shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (d) the Borrower shall furnish to the Agent
the original copy of a receipt evidencing payment thereof within 30 days after
such payment is made.
(ii) In addition, the Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Note or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or Facility LC Application ("Other
Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent, the LC Issuer and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 3.4) paid by the Agent, the LC Issuer or such Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. Payments due under this indemnification shall be made within 30 days
of the date the Agent, the LC Issuer or such Lender makes demand therefor
pursuant to Section 3.6.
Page 25
(iv) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof (each a "Non-U.S. Lender") agrees that it
will, not less than ten Business Days after the date of this Agreement, (i)
deliver to each of the Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes, and
(ii) deliver to each of the Borrower and the Agent a United States Internal
Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to
an exemption from United States backup withholding tax. Each Non-U.S. Lender
further undertakes to deliver to each of the Borrower and the Agent (x) renewals
or additional copies of such form (or any successor form) on or before the date
that such form expires or becomes obsolete, and (y) after the occurrence of any
event requiring a change in the most recent forms so delivered by it, such
additional forms or amendments thereto as may be reasonably requested by the
Borrower or the Agent. All forms or amendments described in the preceding
sentence shall certify that such Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form or amendment with respect to it and such Lender advises the Borrower and
the Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
(v) For any period during which a Non-U.S. Lender has failed to provide
the Borrower with an appropriate form pursuant to clause (iv), above (unless
such failure is due to a change in treaty, law or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 3.4 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (iv), above, the Borrower shall take
such steps as such Non-U.S. Lender shall reasonably request to assist such Non-
U.S. Lender to recover such Taxes.
(vi) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Borrower (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered or properly completed, because such Lender failed to notify
the Agent of a change in circumstances which rendered its exemption from
withholding ineffective, or for any other reason), such Lender shall indemnify
the Agent fully for all amounts paid, directly or indirectly, by the Agent as
tax, withholding therefor, or otherwise, including penalties and interest, and
including taxes imposed by any jurisdiction on amounts payable to the Agent
under this subsection, together with all costs and expenses related thereto
(including attorneys fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent). The obligations of the Lenders under
this Section 3.4(vii) shall survive the payment of the Obligations and
termination of this Agreement.
3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
----------------------------------------
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurocurrency Loans to reduce any liability of the Borrower to
such Lender under Sections 3.1, 3.3 and 3.4 or to avoid the unavailability of
Eurocurrency Advances under Section 3.2, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Borrower (with a copy to the
Agent) as to the amount due, if any, under Section 3.1, 3.3 or 3.4. Such
written statement shall set forth in reasonable detail the calculations upon
which such Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Eurocurrency Loan shall
be calculated as though
Page 26
each Lender funded its Eurocurrency Loan through the purchase of a deposit of
the type, currency and maturity corresponding to the deposit used as a reference
in determining the Eurocurrency Rate applicable to such Loan, whether in fact
that is the case or not. Unless otherwise provided herein, the amount specified
in the written statement of any Lender shall be payable on demand after receipt
by the Borrower of such written statement. The obligations of the Borrower under
Sections 3.1, 3.3 and 3.4 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1. Initial Credit Extension. The Lenders shall not be required to
------------------------
make the initial Credit Extension hereunder unless the Borrower has furnished to
the Agent, duly executed by the appropriate Persons and with sufficient copies
for the Lenders:
(i) This Agreement.
(ii) To the extent requested by any Lender, the Note payable to such
Lender.
(iii) The Borrower Security Agreement.
(iv) The Pledged Shares outstanding on the date of the initial Credit
Extension to the extent certificated or otherwise evidenced by a
writing, accompanied by stock transfer powers therefor executed in
blank.
(v) Acknowledgement copies of all UCC-1 financing statements required
to be delivered by the Borrower pursuant to Section 2.25 evidencing
the filing of such financing statements in the appropriate offices,
in each case accompanied by a UCC Search evidencing the first
priority of the security interest in favor of the Agent for the
benefit of the Lenders in the collateral described therein the
perfection and priority of which is established by such filing.
(vi) Copies of the articles or certificate of incorporation of the
Borrower, together with all amendments, and a certificate of good
standing, each certified by the appropriate governmental officer in
its jurisdiction of incorporation.
(vii) Copies, certified by the Secretary or Assistant Secretary of the
Borrower, of its by-laws and of its Board of Directors' resolutions
and of resolutions or actions of any other body authorizing the
execution of the Loan Documents to which the Borrower is a party.
(viii) An incumbency certificate, executed by the Secretary or Assistant
Secretary of the Borrower, which shall identify by name and title
and bear the signatures of the officers of the Borrower authorized
to sign the Loan Documents to which the Borrower is a party, upon
which certificate the Agent and the Lenders shall be entitled to
rely until informed of any change in writing by the Borrower.
(ix) A certificate, signed by an Authorized Officer, stating that on the
initial Credit Extension Date no Default or Unmatured Default has
occurred and is continuing.
(x) A written opinion of the Borrower's counsel, addressed to the
Agent, the Arranger and the Lenders in substantially the form of
Exhibit G.
---------
(xi) Written money transfer instructions, in the form of Exhibit H,
---------
addressed to the Agent and signed by an Authorized Officer,
together with such other related money transfer authorizations as
the Agent may have reasonably requested.
Page 27
(xii) Information satisfactory to the Agent and the Required Lenders
regarding the Borrower's Year 2000 Program.
(xiii) The insurance certificate described in Section 5.21.
(xiv) Evidence satisfactory to the Agent that upon the funding of the
first Loan, all Indebtedness of the Borrower outstanding under the
Existing TRW Facility, as set forth on a demand statement
delivered by the holder of such Indebtedness to the Agent and the
Borrower, will be paid in full, the credit facility evidenced
thereby terminated and any and all Liens securing the Indebtedness
of the Borrower thereunder terminated and released.
(xv) Evidence to the Agent and the Arranger that all fees required to
be paid by the Borrower with the respect to the transactions
contemplated thereby on or before the date of the initial Credit
Extension have been or will on such date be paid in full.
(xvi) Evidence satisfactory to the Agent that all reasonable and
documented costs and expenses, including, without limitation, fees
of inside and outside counsel to the Agent required to be paid by
the Borrower for which billing statements have been delivered no
less than two Business Days' prior to the initial Credit Extension
Date have been, or will on such date be, paid in full.
(xvii) A Borrowing Base Certificate dated as of the date of the initial
Credit Extension, duly executed by an Authorized Officer,
demonstrating in form and detail satisfactory to the Agent that
the Collateral Value of the Borrowing Base at and as of such date
is sufficient to support the Credit Extensions requested for such
date.
(xviii) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. Each Credit Extension. The Lenders shall not be required to make
---------------------
any Credit Extension unless on the applicable Credit Extension Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are true
m and correct as of such Credit Extension Date except to the
extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or
warranty shall have been true and correct on and as of such
earlier date.
(iii) After giving effect thereto and to the funding of all Related
Facility Loans to be advanced under the Related Facility
Agreements on such Credit Extension Date the Borrower shall be in
compliance with the limitations of Section 2.1.
(iv) All legal matters incident to the making of such Credit Extension
shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice and/or Conversion/Continuation Request or request for
issuance of a Facility LC shall constitute a representation and warranty by the
Borrower that the conditions contained in Sections 4.2(i) and (ii) have been
satisfied. Any Lender may require a duly completed Compliance Certificate as a
condition to making a Credit Extension.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lenders that:
Page 28
5.1. Existence and Standing. Each of the Borrower and its Subsidiaries
----------------------
is a corporation or other legal entity (as described on Schedule 5.8), duly and
------------
properly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
5.2. Authorization and Validity. The Borrower has the power and
--------------------------
authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the Borrower
of the Loan Documents and the performance of its obligations thereunder have
been duly authorized by proper corporate proceedings, and the Loan Documents
constitute legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
5.3. No Conflict; Government Consent. Neither the execution and
-------------------------------
delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate (i) any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower or any of its Subsidiaries or (ii) the
Borrower's or any Subsidiary's articles or certificate of incorporation or other
organizational documents, or (iii) the provisions of any indenture, instrument
or agreement to which the Borrower or any of its Subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of the Borrower or a Subsidiary
pursuant to the terms of any such indenture, instrument or agreement. No order,
consent, adjudication, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other action in
respect of any governmental or public body or authority, or any subdivision
thereof, which has not been obtained by the Borrower or any of its Subsidiaries,
is required to be obtained by the Borrower or any of its Subsidiaries in
connection with the execution and delivery of the Loan Documents, the borrowings
under this Agreement, the payment and performance by the Borrower of the
Obligations or the legality, validity, binding effect or enforceability of any
of the Loan Documents.
5.4. Financial Statements. The January 31, 1998 consolidated financial
--------------------
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.
5.5. Material Adverse Change. Since January 31, 1998 there has been no
-----------------------
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Borrower and its Subsidiaries (except as
disclosed in the Confidential Financing Memorandum dated January 1999 delivered
to the Agent and the Lenders prior to the first Credit Extension Date) which
could reasonably be expected to have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
-----
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided in accordance with Agreement Accounting Principles
and as to which no Lien exists. The United States income tax returns of the
Borrower and its Subsidiaries have been audited by the Internal Revenue Service
through the fiscal year ended December 31, 1994. No tax liens have been filed
and no claims are being asserted with respect to any such taxes. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of any taxes or other governmental charges are adequate.
5.7. Litigation and Contingent Obligations. Except as set forth on
-------------------------------------
Schedule 5.7, there is no litigation, arbitration, governmental investigation,
- ------------
proceeding or inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Borrower or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any
Page 29
Credit Extension. Other than any liability incident to any litigation,
arbitration or proceeding which could not reasonably be expected to have a
Material Adverse Effect, the Borrower has no material Contingent Obligations not
provided for or disclosed in the financial statements referred to in Section
5.4.
5.8. Subsidiaries. Schedule 5.8 contains an accurate list of all
------------ ------------
Subsidiaries of the Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage of their
respective capital stock or other ownership interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital stock
or other ownership interests of such Subsidiaries have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do
-----
not in the aggregate exceed $5,000. Neither the Borrower nor any other member
of the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans in excess of $5,000 in the
aggregate. Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with
respect to any Plan, neither the Borrower nor any other member of the Controlled
Group has withdrawn from any Plan or initiated steps to do so, and no steps have
been taken to reorganize or terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or report
-----------------------
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U)
------------
constitutes less than 25% of the value of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
-------------------
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
--------------------
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property except for any failure
to comply with any of the foregoing which could not reasonably be expected to
have a Material Adverse Effect.
5.14. Ownership of Properties. On the date of this Agreement, the
-----------------------
Borrower and its Subsidiaries will have good title, free of all Liens other than
those permitted by Section 6.15, to all of the Property and assets reflected in
the Borrower's most recent consolidated financial statements provided to the
Agent as owned by the Borrower and its Subsidiaries.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an
------------------------------------
entity deemed to hold "plan assets" within the meaning of 29 C.F.R. (S) 2510.3-
101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is
subject to Title I of ERISA or any plan (within the meaning of Section 4975 of
the Code), and neither the execution of this Agreement nor the making of Credit
Extensions hereunder gives rise to a prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. In the ordinary course of its business, the
---------------------
officers of the Borrower consider the effect of Environmental Laws on the
business of the Borrower and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Borrower
due to Environmental Laws. On the basis of this consideration, the Borrower has
concluded that Environmental Laws cannot reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any
Page 30
Subsidiary has received any notice to the effect that its operations are not in
material compliance with any of the requirements of applicable Environmental
Laws or are the subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any Subsidiary
----------------------
is an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
5.18. Public Utility Holding Company Act. Neither the Borrower nor any
----------------------------------
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.19. Year 2000. The Borrower has made a full and complete assessment
---------
of the Year 2000 Issues and has a realistic and achievable program for
remediating the Year 2000 Issues on a timely basis (the "Year 2000 Program").
Based on such assessment and on the Year 2000 Program the Borrower does not
reasonably anticipate that Year 2000 Issues will have a Material Adverse Effect.
5.20. Subordinated Indebtedness. The Obligations constitute senior
-------------------------
indebtedness which is entitled to the benefits of the subordination provisions
of all outstanding Subordinated Indebtedness.
5.21. Insurance. The certificate signed by the chief financial officer
---------
of the Borrower, that attests to the existence and adequacy of, and summarizes,
the property and casualty insurance program carried by the Borrower with respect
to itself and its Subsidiaries and that has been furnished by the Borrower to
the Agent and the Lenders, is complete and accurate. This summary includes the
insurer's or insurers' name(s), policy number(s), expiration date(s), amount(s)
of coverage, type(s) of coverage, exclusion(s), and deductibles. This summary
also includes similar information, and describes any reserves, relating to any
self-insurance program that is in effect.
ARTICLE VI
COVENANTS
---------
During the term of this Agreement:
6.1. Financial Reporting. The Borrower will maintain, for itself and
-------------------
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants acceptable to the Lenders, prepared in accordance with
Agreement Accounting Principles on a consolidated and consolidating
basis (consolidating statements need not be certified by such
accountants) for itself and its Subsidiaries, including balance
sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash
flows, and (b) a certificate of said accountants that, in the
course of their examination necessary for their certification of
the foregoing, they have obtained no knowledge of any Default or
Unmatured Default, or if, in the opinion of such accountants, any
Default or Unmatured Default shall exist, stating the nature and
status thereof.
(ii) Within 45 days after the close of the first three quarterly periods
of each of its fiscal years, for itself and its Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the
close of each such period and consolidated and consolidating profit
and loss and
Page 31
reconciliation of surplus statements and a statement of cash flows
for the period from the beginning of such fiscal year to the end of
such quarter, all certified by its chief financial officer.
(iii) Together with the financial statements required under Sections
6.1(i) and (ii), a Compliance Certificate signed by an Authorized
Officer of the Borrower showing the calculations necessary to
determine compliance with this Agreement and stating that no
Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
(iv) Within 10 Business Days after the end of each calendar month, a
Borrowing Base Certificate as of the last day of such calendar
month, signed by an Authorized Officer.
(v) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(vi) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports
which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission.
(vii) Promptly following receipt thereof, a copy of any management letter
received from its accountants.
(viii) Such other information (including non-financial information) as the
Agent or any Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Borrower will use the proceeds of the
---------------
Advances to refinance certain Indebtedness of the Borrower and to finance
working capital needs, acquisitions and capital expenditures and will use the
Facility LCs for general corporate purposes. The Borrower will not, nor will it
permit any Subsidiary to, use any of the proceeds of the Advances to purchase or
carry any "margin stock" (as defined in Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each
-----------------
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default and of any other development, financial or
otherwise (including, without limitation, developments with respect to Year 2000
Issues), which could reasonably be expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
-------------------
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain duly organized, validly existing
and in good standing as a domestic corporation, partnership or limited liability
company in its jurisdiction of organization and maintain all requisite authority
to conduct its business in each jurisdiction in which its business is conducted.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
-----
timely file complete and correct United States federal and applicable foreign,
state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside in
accordance with Agreement Accounting Principles.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
---------
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to the Agent no less
frequently than annually and at such other times as the Agent may request
evidence as to the insurance carried and full information with respect thereto.
Page 32
6.7. Compliance with Laws. The Borrower will, and will cause each
--------------------
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including,
without limitation, all Environmental Laws.
6.8. Maintenance of Properties. The Borrower will, and will cause each
-------------------------
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each Subsidiary to,
----------
permit the Agent (and, following the occurrence and during the continuance of a
Default or an Unmatured Default, the Lenders), by their respective
representatives and agents, to inspect any of the Property, books and financial
records of the Borrower and each Subsidiary, to examine and make copies of the
books of accounts and other financial records of the Borrower and each
Subsidiary, and to discuss the affairs, finances and accounts of the Borrower
and each Subsidiary with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Agent (and, following the
occurrence and during the continuance of a Default or an Unmatured Default, any
Lender) may designate.
6.10. Dividends. The Borrower will not, nor will it permit any
---------
Subsidiary to, declare or pay any dividends or make any distributions on its
capital stock (other than dividends payable in its own capital stock) or redeem,
repurchase or otherwise acquire or retire any of its capital stock at any time
outstanding, except that any Subsidiary may declare and pay dividends or make
distributions to the Borrower or to a Wholly-Owned Subsidiary and, so long has
there has not occurred and is continuing a Default or Unmatured Default, the
Borrower may redeem stock held by officers and other employees for consideration
not to exceed $1,000,000 in the aggregate over the term of this Agreement.
6.11. Indebtedness. The Borrower will not, nor will it permit any
------------
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Obligations and the Related Facilities Obligations.
(ii) The Guaranties.
(iii) Indebtedness arising under Rate Hedging Agreements entered into with
First Chicago.
(iv) Other Indebtedness in an aggregate amount not to exceed $8,000,000
at any date; provided, however, that all such other Indebtedness in
excess of $5,000,000 shall be incurred in connection with
Acquisitions permitted under Section 6.14(iii) below and shall be
Subordinated Indebtedness (such subordination permitting, however,
payment on such Subordinated Indebtedness so long as there does not
exist a Default or Unmatured Default), with such other Indebtedness
existing at the date hereof being described on Schedule 6.11(iv).
-----------------
6.12. Merger. The Borrower will not, nor will it permit any Subsidiary
------
to, merge or consolidate with or into any other Person, except that a Subsidiary
may merge into the Borrower or a Wholly-Owned Subsidiary.
6.13. Sale of Assets. The Borrower will not, nor will it permit any
--------------
Subsidiary to, lease, sell or otherwise dispose of its Property to any other
Person, except:
(i) Sales of inventory in the ordinary course of business and for fair
market value.
(ii) Leases, sales or other dispositions of its Property that, together
with all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of (other than inventory in the
ordinary course of business) as permitted by this Section during the
twelve-month period ending with the month in which any such lease,
sale or other disposition occurs, with a fair market value not to
exceed $5,000,000.
Page 33
6.14. Investments and Acquisitions. The Borrower will not, nor will it
----------------------------
permit any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or remain a partner in any partnership or joint venture, or to make any
Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described on Schedule 6.14(ii).
-----------------
(iii) Acquisitions for a total cash consideration not to exceed: (a) for
any single Acquisition or series of related Acquisitions, 15% of
Consolidated Net Worth, or (b) which when taken together with all
other Acquisitions by the Borrower and its Subsidiaries during the
twelve-month period ending with the month in which such Acquisition
occurs 25% of Consolidated Net Worth.
6.15. Liens. The Borrower will not, nor will it permit any Subsidiary
-----
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on its
Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate
reserves in accordance with Agreement Accounting Principles shall
have been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more than
60 days past due or which are being contested in good faith by
appropriate proceedings and for which adequate reserves shall have
been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's compensation
laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other encumbrances
or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which
do not in any material way affect the marketability of the same or
interfere with the use thereof in the business of the Borrower or its
Subsidiaries.
(v) Liens existing on the date hereof and described on Schedule 6.15(v).
----------------
(vi) Liens in favor of the Agent for the benefit of the Lenders securing
the Obligations and/or the Related Facilities Obligations.
(vii) Purchase money Liens securing Indebtedness permitted under Section
6.11(iv) above and conditional sale agreements and other title
retention agreements covering property acquired following the initial
Credit Extension Date; provided, however, that no such Lien or
agreement shall extend to any property other than the property
acquired in connection therewith.
6.16. Year 2000. The Borrower will take and will cause each of its
---------
Subsidiaries to take all such actions as are reasonably necessary to
successfully implement the Year 2000 Program and to assure that Year 2000 Issues
will not have a Material Adverse Effect. At the request of the Agent, the
Borrower will provide a description of the Year 2000 Program, together with any
updates or progress reports with respect thereto.
6.17. Affiliates. The Borrower will not, and will not permit any
----------
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any
Page 34
payment or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction.
6.18. Subordinated Indebtedness. The Borrower will not, and will not
-------------------------
permit any Subsidiary to: (i) make any amendment or modification to the
indenture, note or other agreement evidencing or governing any Subordinated
Indebtedness permitted hereunder, or (ii) directly or indirectly voluntarily
prepay, defease or in substance defease, purchase, redeem, retire or otherwise
acquire, any Subordinated Indebtedness (it being expressly agreed by the Agent
and the Lenders that, so long as there shall not exist a Default or Unmatured
Default, prepayment of the Subordinated Indebtedness permitted pursuant to
Section 6.11(iv) shall not consitute a violation of this subsection (ii)).
6.19. Sale of Accounts. The Borrower will not, nor will it permit any
----------------
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse.
6.20. Sale and Leaseback Transactions. The Borrower will not, nor will
-------------------------------
it permit any Subsidiary to, enter into or suffer to exist any Sale and
Leaseback Transaction.
6.21. Letters of Credit. The Borrower will not, nor will it permit any
-----------------
Subsidiary to, apply for or become liable upon or in respect of any Letter of
Credit other than the Facility LCs.
6.22. Financial Contracts. The Borrower will not, nor will it permit
-------------------
any Subsidiary to, enter into or remain liable upon any Financial Contract,
except Rate Hedging Agreements entered into with First Chicago.
6.23. Financial Covenants.
-------------------
6.23.1. Interest Coverage Ratio. The Borrower will not permit the
-----------------------
ratio, determined as of the end of each of its fiscal quarters, commencing
with the fiscal quarter ending January 31, 2000, for the then most-recently
ended four fiscal quarters, of (i) Consolidated EBITDA plus Consolidated
Rentals to (ii) Consolidated Interest Expense plus Consolidated Rentals to
be less than 1.30 to 1.0.
6.23.2. Leverage Ratio. The Borrower will not permit the ratio,
--------------
determined as of the end of each of its fiscal quarters, commencing with
the fiscal quarter ending January 31, 2000, of (i) Consolidated Funded
Indebtedness to (ii) Consolidated EBITDA less Consolidated Capital
Expenditures for the then most-recently ended four fiscal quarters to be
greater than 2.00 to 1.0.
6.23.3. Minimum Net Worth. The Borrower will at all times maintain
-----------------
Consolidated Net Worth of not less than the sum of (i) $73,000,000 plus
(ii) 75% of Consolidated Net Income earned in each fiscal quarter beginning
with the quarter ending April 30, 1999 (without deduction for losses), and
plus (iii) 100% of the net proceeds from any equity offering of the
Borrower or any of its Subsidiaries; provided, however, that for purposes
of calculation of compliance with this Section 6.23.3, "Consolidated Net
Worth" shall not include more than 50% of intangible assets.
6.23.4. Minimum EBITDA. The Borrower will at all times maintain
--------------
Consolidated EBITDA of not less than: (i) during the fiscal quarter ending
April 30, 1999, $500,000 (after adding back a one time restructuring charge
not to exceed $1,500,000), (ii) during the fiscal quarter ending July 31,
1999, $5,900,000, and (iii) during the fiscal quarter ending October 31,
1999, $4,400,000.
6.23.5 Capital Expenditures. The Borrower will not, nor will it
--------------------
permit any Subsidiary to, expend or be committed to expend in excess of
$12,000,000 in the aggregate for Capital Expenditures during the fiscal
quarters ending April 30, 1999, July 31, 1999 and October 31, 1999.
6.23.6 Minimum Research and Development Expenditures. The
---------------------------------------------
Borrower will expend, determined as of the end of each of its fiscal
quarters, commencing with the fiscal quarter ending April 30, 1999, for the
then most-recently ended four fiscal quarters, not less than 7.50% of the
dollar amount of its consolidated gross sales on research and development.
Page 35
ARTICLE VII
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in
connection with this Agreement, any Credit Extension, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be inaccurate or incomplete in any material respect on the date
as of which made.
7.2. Nonpayment of principal of any Loan when due, nonpayment of any
Reimbursement Obligation within one Business Day after the same becomes due, or
nonpayment of interest upon any Loan or of any commitment fee, LC Fee or other
obligations under any of the Loan Documents within five days after the same
becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.2 or Sections 6.10 through 6.23 of Article VI or the failure of the
Borrower to observe or perform any of its obligations under the Borrower
Security Agreement.
7.4. The breach by the Borrower (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms or
provisions of this Agreement or any other Loan Document which is not remedied
within five Business Days after written notice from the Agent or any Lender.
7.5. The occurrence of a "Default" under (and as that term is defined in)
any Related Facility Credit Agreement.
7.6 Failure of the Borrower or any of its Subsidiaries to pay when due any
Indebtedness (other than the Obligations and the Related Facilities Obligations)
aggregating in excess of $3,000,000; or the default by the Borrower or any of
its Subsidiaries in the performance (beyond the applicable grace period with
respect thereto, if any) of any term, provision or condition contained in any
agreement under which any such Indebtedness was created or is governed, or any
other event shall occur or condition exist, the effect of which default or event
is to cause, or to permit the holder or holders of such Indebtedness to cause,
such Indebtedness to become due prior to its stated maturity; or any
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof; or the
Borrower or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.7. The Borrower or any of its Subsidiaries shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (v)
take any corporate or partnership action to authorize or effect any of the
foregoing actions set forth in this Section 7.7 or (vi) fail to contest in good
faith any appointment or proceeding described in Section 7.8.
7.8. Without the application, approval or consent of the Borrower or any
of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.7(iv) shall be
Page 36
instituted against the Borrower or any of its Subsidiaries and such appointment
continues undischarged or such proceeding continues undismissed or unstayed for
a period of 60 consecutive days.
7.9. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of the Borrower and its Subsidiaries which, when taken together with
all other Property of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs, constitutes a Substantial
Portion.
7.10. The Borrower or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge one or more (i) judgments or orders for the
payment of money in excess of $3,000,000 (or the equivalent thereof in
currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgment(s), in any such case,
is/are not stayed on appeal or otherwise being appropriately contested in good
faith.
7.11. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $5,000 or any Reportable Event shall occur in connection with
any Plan.
7.12. Any Change in Control shall occur.
7.13. The Borrower Security Agreement shall for any reason fail to create
or there shall otherwise cease to be in existence a valid and perfected first
priority security interest in the collateral purported to be covered thereby
(other than as a direct result of the release thereof by the Agent or the
failure of the Agent to file a continuation statement) or the Borrower Security
Agreement shall fail to remain in full force or effect or any action shall be
taken to rescind or revoke the Borrower Security Agreement or to assert the
invalidity or unenforceability of the Borrower Security Agreement or any term or
provisions thereof.
Page 37
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1. Acceleration; Facility LC Collateral Account. (i) If any Default
--------------------------------------------
described in Section 7.7 or 7.8 occurs with respect to the Borrower, the
obligations of the Lenders to make Loans hereunder and the obligation and power
of the LC Issuer to issue Facility LCs shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Agent, the LC Issuer or any Lender and the Borrower
will be and become thereby unconditionally obligated, without any further
notice, act or demand, to pay to the Agent an amount in immediately available
funds, which funds shall be held in the Facility LC Collateral Account, equal to
the difference of (a) the amount of LC Obligations at such time, less (b) the
amount on deposit in the Facility LC Collateral Account at such time which is
free and clear of all rights and claims of third parties and has not been
applied against the Obligations (such difference, the "Collateral Shortfall
Amount"). If any other Default occurs, the Required Lenders (or the Agent with
the consent of the Required Lenders) may (1) terminate or suspend the
obligations of the Lenders to make Loans hereunder and the obligation and power
of the LC Issuer to issue Facility LCs, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives, and (2) upon notice to the Borrower
and in addition to the continuing right to demand payment of all amounts payable
under this Agreement, make demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or act, pay to the
Agent the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.
(ii) If at any time while any Default is continuing, the Agent determines
that the Collateral Shortfall Amount at such time is greater than zero, the
Agent may make demand on the Borrower to pay, and the Borrower will, forthwith
upon such demand and without any further notice or act, pay to the Agent the
Collateral Shortfall Amount, which funds shall be deposited in the Facility LC
Collateral Account.
(iii) The Agent may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the payment
of the Obligations and any other amounts as shall from time to time have become
due and payable by the Borrower to the Lenders or the LC Issuer under the Loan
Documents.
(iv) At any time while any Default is continuing, neither the Borrower nor
any Person claiming on behalf of or through the Borrower shall have any right to
withdraw any of the funds held in the Facility LC Collateral Account. After all
of the Obligations have been indefeasibly paid in full and the Aggregate
Commitment has been terminated, any funds remaining in the Facility LC
Collateral Account shall be returned by the Agent to the Borrower or paid to
whomever may be legally entitled thereto at such time.
8.2. Amendments. Subject to the provisions of this Article VIII, the
----------
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of all of the Lenders:
(i) Extend the final maturity of any Loan, or extend the expiry date of
any Facility LC to a date after the Facility Termination Date or
postpone any regularly scheduled payment of principal of any Loan or
forgive all or any portion of the principal amount thereof or any
Reimbursement Obligation related thereto, or reduce the rate or
extend the time of payment of interest or fees thereon or
Reimbursement Obligations related thereto.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Facility Termination Date, or reduce the amount or extend
the payment date for, the mandatory payments required under Section
2.2, or increase the amount of the Aggregate
Page 38
Commitment , the Commitment of any Lender or the commitment to issue
Facility LCs, or permit the Borrower to assign its rights under this
Agreement.
(iv) Amend this Section 8.2.
(v) Release all or substantially all of the collateral purported to be
covered by the Borrower Security Agreement.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent, and no amendment of any
provision relating to the LC Issuer shall be effective without the written
consent of the LC Issuer. The Agent may waive payment of the fee required under
Section 12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders, the
----------------------
LC Issuer or the Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Credit Extension notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Agent, the LC Issuer and the Lenders until the Obligations have been paid
in full.
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1. Survival of Representations. All representations and warranties of
---------------------------
the Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to
-----------------------
the contrary notwithstanding, neither the LC Issuer nor any Lender shall be
obligated to extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.
9.3. Headings. Section headings in the Loan Documents are for
--------
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents and the Related Facility Loan
----------------
Documents embody the entire agreement and understanding among the Borrower, the
Agent, the LC Issuer and the Lenders and supersede all prior agreements and
understandings among the Borrower, the Agent, the LC Issuer and the Lenders
relating to the subject matter thereof.
9.5. Several Obligations; Benefits of this Agreement. The respective
-----------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns, provided, however, that the parties
hereto expressly agree that the Arranger shall enjoy the benefits of the
provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf
and in its own name to the same extent as if it were a party to this Agreement.
9.6. Expenses; Indemnification. (i) The Borrower shall reimburse the
-------------------------
Agent and the Arranger for any costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of
Page 39
attorneys for the Agent, which attorneys may be employees of the Agent) paid or
incurred by the Agent or the Arranger in connection with the preparation,
negotiation, execution, delivery, syndication, review, amendment, modification,
and administration of the Loan Documents, including, without limitation, costs,
charges and expenses incident to audits by the Agent of the books and records of
the Borrower and its Subsidiaries, including preparation and distribution of
reports relating to the same to the Lenders, provided, that prior to the
occurrence of a Default or an Unmatured Default, the Borrower shall not be
obligated to pay: (a) the costs, charges and expenses for more than a single
audit for each of such Persons during each consecutive 12-month period, or (b)
unless the Agent shall have reasonable grounds to believe that fraudulent
reporting or other questionable information is being provided with respect to
any Foreign Subsidiary, costs, charges and expenses associated with the audit of
any Foreign Subsidiary conducted outside of the United States of America in
excess of $15,000 during any consecutive 12-month period. The Borrower also
agrees to reimburse the Agent, the Arranger, the LC Issuer and the Lenders for
any costs, internal charges and out-of-pocket expenses (including attorneys'
fees and time charges of attorneys for the Agent, the Arranger, the LC Issuer
and the Lenders, which attorneys may be employees of the Agent, the Arranger,
the LC Issuer or the Lenders) paid or incurred by the Agent, the Arranger, the
LC Issuer or any Lender in connection with the collection and enforcement of the
Loan Documents following the occurrence of a Default.
(ii) The Borrower hereby further agrees to indemnify the Agent, the
Arranger, the LC Issuer and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent, the Arranger, the LC Issuer or
any Lender is a party thereto) which any of them may pay or incur arising out of
or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Credit Extension hereunder except to the
extent that they are determined in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the party seeking indemnification. The obligations of the
Borrower under this Section 9.6 shall survive the termination of this Agreement.
9.7. Accounting. Except as provided to the contrary herein, all
----------
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.8. Severability of Provisions. Any provision in any Loan Document
--------------------------
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.9. Nonliability of Lenders. The relationship between the Borrower on
-----------------------
the one hand and the Lenders, the LC Issuer and the Agent on the other hand
shall be solely that of borrower and lender. Neither the Agent, the Arranger,
the LC Issuer nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent, the Arranger, the LC Issuer nor any Lender
undertakes any responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's business or
operations. The Borrower agrees that neither the Agent, the Arranger, the LC
Issuer nor any Lender shall have liability to the Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower in connection
with, arising out of, or in any way related to, the transactions contemplated
and the relationship established by the Loan Documents, or any act, omission or
event occurring in connection therewith, unless it is determined in a final non-
appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought. Neither the Agent, the Arranger, the LC Issuer nor any
Lender shall have any liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect or consequential
damages suffered by the Borrower in connection with, arising out of, or in any
way related to the Loan Documents or the transactions contemplated thereby.
9.10. Confidentiality. Each Lender agrees to hold any confidential
---------------
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates and to other Lenders and
their respective Affiliates, (ii) to legal counsel, accountants, and other
professional
Page 40
advisors to such Lender or to a Transferee, (iii) to regulatory officials, (iv)
to any Person as requested pursuant to or as required by law, regulation, or
legal process, (v) to any Person in connection with any legal proceeding to
which such Lender is a party, (vi) to such Lender's direct or indirect
contractual counterparties in swap agreements or to legal counsel, accountants
and other professional advisors to such counterparties, and (vii) permitted by
Section 12.4.
ARTICLE X
THE AGENT
---------
10.1. Appointment; Nature of Relationship. The First National Bank of
-----------------------------------
Chicago is hereby appointed by each of the Lenders as its contractual
representative (herein referred to as the "Agent") hereunder and under each
other Loan Document, under each of the Related Facility Credit Agreements each
of the Subsidiary Borrower Loan Documents (as defined in the Related Facility
Credit Agreements) (collectively, the "Combined Credit Facilities Documents")
and each of the Lenders irrevocably authorizes the Agent to act as the
contractual representative of such Lender with the rights and duties expressly
set forth herein and in the other Combined Credit Facilities Documents. The
Agent agrees to act as such contractual representative upon the express
conditions contained in this Article X. Notwithstanding the use of the defined
term "Agent," it is expressly understood and agreed that the Agent shall not
have any fiduciary responsibilities to any Lender by reason of this Agreement or
any other Combined Credit Facilities Document and that the Agent is merely
acting as the contractual representative of the Lenders with only those duties
as are expressly set forth in this Agreement and the other Combined Credit
Facilities Documents. In its capacity as the Lenders' contractual
representative, the Agent (i) does not hereby assume any fiduciary duties to any
of the Lenders, (ii) is a "representative" of the Lenders within the meaning of
Section 9-105 of the Uniform Commercial Code and (iii) is acting as an
independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Combined Credit Facilities
Documents. Each of the Lenders hereby agrees to assert no claim against the
Agent on any agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives.
10.2. Powers. The Agent shall have and may exercise such powers under
------
the Combined Credit Facilities Documents as are specifically delegated to the
Agent by the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the Lenders, or
any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Combined Credit Facilities Documents to be taken by
the Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
----------------
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Combined Credit Facilities Document or in connection herewith
or therewith except to the extent such action or inaction is determined in a
final non-appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor
-------------------------------------------
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Combined Credit Facilities
Document or any borrowing hereunder or thereunder; (ii) the performance or
observance of any of the covenants or agreements of any obligor under any
Combined Credit Facilities Document, including, without limitation, any
agreement by an obligor to furnish information directly to each Lender; (iii)
the satisfaction of any condition specified in Article IV, except receipt of
items required to be delivered solely to the Agent; (iv) the existence or
possible existence of any Default or Unmatured Default (as such terms are
defined in any of the combined Facilities Credit Documents); (v) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Combined Credit
Facilities Document or any other instrument or writing furnished in connection
therewith; (vi) the value, sufficiency, creation, perfection or priority of any
Lien in any collateral security; or (vii) the financial condition of the
Borrower, any Subsidiary Borrower (as defined in the Related Facility Credit
Agreements) or any guarantor of any of the Obligations or the Subsidiary
Borrower Obligations (as defined in the Related Facility Credit Agreements) or
of any of the Borrower's or any Subsidiary Borrower's or such
Page 41
guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to
the Lenders information that is not required to be furnished by the Borrower to
the Agent at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases
---------------------------------
be fully protected in acting, or in refraining from acting, hereunder and under
any other Combined Credit Facilities Document in accordance with written
instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Combined Credit Facilities Document
unless it shall be requested in writing to do so by the Required Lenders. The
Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Combined Credit Facilities Document unless it
shall first be indemnified to its satisfaction by the Lenders pro rata against
any and all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of
--------------------------------
its duties as Agent hereunder and under any other Combined Credit Facilities
Document by or through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it or
its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning the contractual arrangement between the
Agent and the Lenders and all matters pertaining to the Agent's duties hereunder
and under any other Combined Credit Facilities Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to
------------------------------
rely upon any notice, consent, certificate, affidavit, letter, telegram,
statement, paper, document or instrument believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by the Agent,
which counsel may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
-----------------------------------------
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Combined Credit Facilities Documents, (ii) for any other
expenses incurred by the Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Combined
Credit Facilities Documents (including, without limitation, for any expenses
incurred by the Agent in connection with any dispute between the Agent and any
Lender or between two or more of the Lenders) and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of the Combined Credit Facilities Documents or any other document delivered
in connection therewith or the transactions contemplated thereby (including,
without limitation, for any such amounts incurred by or asserted against the
Agent in connection with any dispute between the Agent and any Lender or between
two or more of the Lenders), or the enforcement of any of the terms of the
Combined Credit Facilities Documents or of any such other documents, provided
that (i) no Lender shall be liable for any of the foregoing to the extent any of
the foregoing is found in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Agent and (ii) any indemnification required pursuant to
Section 3.4(vii) of this Agreement or any Related Facility Credit Agreement
shall, notwithstanding the provisions of this Section 10.8, be paid by the
relevant Lender in accordance with the provisions thereof. The obligations of
the Lenders under this Section 10.8 shall survive payment of the Obligations and
termination of this Agreement.
10.9. Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Unmatured Default under
any Combined Credit Facilities Document unless the Agent has received written
notice from a Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
give prompt notice thereof to the Lenders.
Page 42
10.10. Rights as a Lender. In the event the Agent is a Lender, the
------------------
Agent shall have the same rights and powers hereunder and under any other
Combined Credit Facilities Document with respect to its Commitment and its Loans
as any Lender and may exercise the same as though it were not the Agent, and the
term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless
the context otherwise indicates, include the Agent in its individual capacity.
The Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Combined Credit
Facilities Document, with the Borrower or any of its Subsidiaries in which the
Borrower or such Subsidiary is not restricted hereby from engaging with any
other Person.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Agent, the Arranger or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Combined
Credit Facilities Documents. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent, the Arranger or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Combined Credit Facilities Documents.
10.12. Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders within thirty days
after the resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent may at any
time without the consent of the Borrower or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Agent hereunder. If the
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder and
under the Combined Credit Facilities Documents. After the effectiveness of the
resignation or removal of an Agent, the provisions of this Article X shall
continue in effect for the benefit of such Agent in respect of any actions taken
or omitted to be taken by it while it was acting as the Agent hereunder and
under the other Combined Credit Facilities Documents. In the event that there
is a successor to the Agent by merger, or the Agent assigns its duties and
obligations to an Affiliate pursuant to this Section 10.12, then the term
"Corporate Base Rate" as used in this Agreement shall mean the prime rate, base
rate or other analogous rate of the new Agent.
10.13. Agent's Fee. The Borrower agrees to pay to the Agent, for its
-----------
own account, the fees agreed to by the Borrower and the Agent pursuant to that
certain letter agreement dated March 11, 1999, or as otherwise agreed from time
to time.
10.14. Delegation to Affiliates. The Borrower and the Lenders agree
------------------------
that the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers,
agents and employees) which performs duties in connection with this Agreement
shall be entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles IX and X.
Page 43
ARTICLE XI
SETOFF; RATABLE PAYMENTS
------------------------
11.1. Setoff. In addition to, and without limitation of, any rights of
------
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
----------------
has payment made to it upon its Outstanding Credit Exposure (other than payments
received pursuant to Section 3.1, 3.3 or 3.4) in a greater proportion than that
received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their respective Pro Rata Shares of the
Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
12.1. Successors and Assigns. The terms and provisions of the Loan
----------------------
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (ii) of this Section, any Lender may
at any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and the other Combined Credit
Facilities Documents to a Federal Reserve Bank; provided, however, that no such
assignment to a Federal Reserve Bank shall release the transferor Lender from
its obligations hereunder or under such Combined Credit Facilities Documents.
The Agent may treat the Person which made any Loan or which holds any Note as
the owner thereof for all purposes hereof unless and until such Person complies
with Section 12.3 in the case of an assignment thereof or, in the case of any
other transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of the rights to any Loan or any Note agrees by
acceptance of such transfer or assignment to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Loan (whether or not a Note has been
issued in evidence thereof), shall be conclusive and binding on any subsequent
holder, transferee or assignee of the rights to such Loan.
12.2. Participations.
--------------
12.2.1. Permitted Participants; Effect. Any Lender may, in the
------------------------------
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Outstanding Credit Exposure of such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender under the Combined Credit Facilities Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Combined Credit Facilities
Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the owner of its Outstanding Credit
Exposure and the holder of any Note issued to it in evidence thereof for
all purposes under the
Page 44
Combined Credit Facilities Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Combined Credit Facilities
Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to
-------------
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Combined Credit Facilities
Documents other than any amendment, modification or waiver with respect to
any Credit Extension, Related Facility Loan or Commitment in which such
Participant has an interest which forgives principal, interest, fees or any
Reimbursement Obligations or reduces the interest rate or fees payable with
respect to any such Credit Extension, Related Facility Loan or Commitment,
extends the Facility Termination Date, postpones any date fixed for any
regularly-scheduled payment of principal of or interest on any Loan in
which such Participant has an interest, or any regularly-scheduled payment
of fees on any such Credit Extension, Related Facility Loan or Commitment,
releases any guarantor of any such Credit Extension, Related Facility Loan
or releases any collateral held in the Facility LC Collateral Account
(except in accordance with the terms hereof) or all or substantially all of
any other collateral, if any, securing any such Credit Extension or Related
Facility Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that each Participant
-----------------
shall be deemed to have the right of setoff provided in Section 11.1 hereof
and of each Related Facility Credit Agreement in respect of its
participating interest in amounts owing under the Combined Credit
Facilities Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Combined Credit Facilities Documents, provided that each Lender shall
retain the right of setoff provided in Section 11.1 hereof and of each
Related Facility Credit Agreement with respect to the amount of
participating interests sold to each Participant. The Lenders agree to
share with each Participant, and each Participant, by exercising the right
of setoff provided in Section 11.1hereof and of each Related Facility
Credit Agreement, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared
in accordance with Section 11.2 hereof and of each Related Facility Credit
Agreement as if each Participant were a Lender.
12.3. Assignments.
-----------
12.3.1. Permitted Assignments. Any Lender may, in the ordinary
---------------------
course of its business and in accordance with applicable law, at any time
assign to one or more banks or other entities ("Purchasers") all or any
part of its rights and obligations under the Combined Credit Facilities
Documents. Such assignment shall be evidenced by an Assignment Agreement.
The consent of the Borrower and the Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof; provided, however, that if a Default has
occurred and is continuing, the consent of the Borrower shall not be
required. Such consent shall not be unreasonably withheld or delayed. Each
such assignment with respect to a Purchaser which is not a Lender or an
Affiliate thereof shall (unless each of the Borrower and the Agent
otherwise consents) be in an amount not less than the lesser of (i)
$5,000,000 or (ii) the remaining amount of the assigning Lender's
Commitment (calculated as at the date of such assignment) or outstanding
Loans (if the applicable Commitment has been terminated).
12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of an
----------------------
assignment, together with any consents required by Section 12.3.1, and (ii)
payment of a $3,000 fee to the Agent for processing such assignment (unless
such fee is waived by the Agent), such assignment shall become effective on
the effective date specified in such assignment. The assignment shall
contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Outstanding
Credit Exposure under the applicable assignment agreement constitutes "plan
assets" as defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser
shall for all purposes be a Lender party to this Agreement and any other
Combined Credit Facilities Document executed by or on behalf of the Lenders
and
Page 45
shall have all the rights and obligations of a Lender under the Combined
Credit Facilities Documents, to the same extent as if it were an original
party thereto, and no further consent or action by the Borrower, any
Subsidiary Borrower, the Lenders or the Agent shall be required to release
the transferor Lender with respect to the percentage of the Aggregate
Commitment and Outstanding Credit Exposure assigned to such Purchaser. Upon
the consummation of any assignment to a Purchaser pursuant to this Section
12.3.2, the transferor Lender, the Agent and the Borrower shall, if the
transferor Lender or the Purchaser desires that its Loans be evidenced by
Notes, make appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in each case
in principal amounts reflecting their respective Commitments, as adjusted
pursuant to such assignment.
12.4. Dissemination of Information. The Borrower authorizes each Lender
----------------------------
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.11 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
-------------
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.4(iv).
ARTICLE XIII
NOTICES
-------
13.1. Notices. Except as otherwise permitted by Section 2.14 with
-------
respect to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Borrower or the Agent, at its address or facsimile number set
forth on the signature pages hereof, (y) in the case of any Lender, at its
address or facsimile number set forth in its administrative questionnaire or (z)
in the case of any party, at such other address or facsimile number as such
party may hereafter specify for the purpose by notice to the Agent and the
Borrower in accordance with the provisions of this Section 13.1. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered (or, in the case of electronic transmission, received) at the
address specified in this Section; provided that notices to the Agent under
Article II shall not be effective until received.
13.2. Change of Address. The Borrower, the Agent and any Lender may
-----------------
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XIV
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent, the LC Issuer
and the Lenders and each party has notified the Agent by facsimile transmission
or telephone that it has taken such action.
Page 46
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
------------------------------------------------------------
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
-------------
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF CALIFORNIA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
-----------------------
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR CALIFORNIA
STATE COURT SITTING IN LOS ANGELES, CALIFORNIA IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN LOS ANGELES, CALIFORNIA.
15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
--------------------
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer and the Agent
have executed this Agreement as of the date first above written.
QAD INC., a Delaware corporation
By:_____________________________________
A.J. Moyer, Executive Vice President and
Chief Financial Officer
Address: 6450 Via Real
Carpinteria, California 93013
Attn: A.J. Moyer, Executive
Vice President and CFO
TEL: (805) 566-4464
FAX: (805) 566-4479
Page 47
Commitments
- -----------
$30,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: _______________________________________
Mark A. Isley, First Vice President
Address: One First National Plaza
Chicago, Illinois 60670
Attention: Mark A. Isley,
First Vice President
TEL: (231) 683-4964
FAX: (213) 683-4949
Page 48
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS....................................................................... 2
ARTICLE II. THE CREDIT........................................................................ 14
2.1. Commitment........................................................................ 14
2.2. Required Payments; Termination.................................................... 14
2.3. Ratable Loans..................................................................... 14
2.4. Types of Advances................................................................. 14
2.5. Commitment Fee; Reductions in Aggregate Commitment................................ 14
2.6. Minimum Amount of Each Advance.................................................... 15
2.7. Optional and Mandatory Principal Payments......................................... 15
2.8. Method of Selecting Types and Interest Periods for New Advances................... 15
2.9. Conversion and Continuation of Outstanding Advances............................... 15
2.10. Method of Borrowing............................................................... 16
2.11. Changes in Interest Rate, etc..................................................... 17
2.12. Rates Applicable After Default.................................................... 17
2.13. Method of Payment................................................................. 17
2.14. European Economic and Monetary Union.............................................. 18
2.15. Noteless Agreement; Evidence of Indebtedness...................................... 18
2.16. Presumed Authorization; Telephonic Notices........................................ 18
2.17. Interest Payment Dates; Interest and Fee Basis.................................... 18
2.18. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions... 19
2.19. Lending Installations............................................................. 19
2.20. Non-Receipt of Funds by the Agent................................................. 19
2.21. Facility LCs...................................................................... 19
2.21.1. Issuance................................................................ 19
2.21.2. Participations.......................................................... 20
2.21.3. Notice.................................................................. 20
2.21.4. LC Fees................................................................. 20
2.21.5. Administration; Reimbursement by Lenders................................ 20
2.21.6. Reimbursement by Borrower............................................... 20
2.21.7. Obligations Absolute.................................................... 21
2.21.8. Actions of LC Issuer.................................................... 21
2.21.9. Indemnification......................................................... 21
2.21.10. Lenders' Indemnification............................................... 22
2.21.11. Facility LC Collateral Account......................................... 22
2.21.12. Rights as a Lender..................................................... 22
2.22. Replacement of Lender............................................................. 23
2.23. Market Disruption................................................................. 23
2.24. Judgment Currency................................................................. 23
2.25. Collateral Security............................................................... 23
ARTICLE III. YIELD PROTECTION; TAXES........................................................... 24
3.1. Yield Protection.................................................................. 24
3.2. Availability of Types of Advances................................................. 25
3.3. Funding Indemnification........................................................... 25
3.4. Taxes 25
3.5. Lender Statements; Survival of Indemnity.......................................... 26
ARTICLE IV. CONDITIONS PRECEDENT.............................................................. 27
4.1. Initial Credit Extension.......................................................... 27
4.2. Each Credit Extension............................................................. 28
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TABLE OF CONTENTS
ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................................... 28
5.1. Existence and Standing............................................................ 29
5.2. Authorization and Validity........................................................ 29
5.3. No Conflict; Government Consent................................................... 29
5.4. Financial Statements.............................................................. 29
5.5. Material Adverse Change........................................................... 29
5.6. Taxes 29
5.7. Litigation and Contingent Obligations............................................. 29
5.8. Subsidiaries...................................................................... 30
5.9. ERISA 30
5.10. Accuracy of Information........................................................... 30
5.11. Regulation U...................................................................... 30
5.12. Material Agreements............................................................... 30
5.13. Compliance With Laws.............................................................. 30
5.14. Ownership of Properties........................................................... 30
5.15. Plan Assets; Prohibited Transactions.............................................. 30
5.16. Environmental Matters............................................................. 30
5.17. Investment Company Act............................................................ 31
5.18. Public Utility Holding Company Act................................................ 31
5.19. Year 2000......................................................................... 31
5.20. Subordinated Indebtedness......................................................... 31
5.21. Insurance......................................................................... 31
ARTICLE VI. COVENANTS......................................................................... 31
6.1. Financial Reporting............................................................... 31
6.2. Use of Proceeds................................................................... 32
6.3. Notice of Default................................................................. 32
6.4. Conduct of Business............................................................... 32
6.5. Taxes 32
6.6. Insurance......................................................................... 32
6.7. Compliance with Laws.............................................................. 33
6.8. Maintenance of Properties......................................................... 33
6.9. Inspection........................................................................ 33
6.10. Dividends......................................................................... 33
6.11. Indebtedness...................................................................... 33
6.12. Merger............................................................................ 33
6.13. Sale of Assets.................................................................... 33
6.14. Investments and Acquisitions...................................................... 34
6.15. Liens............................................................................. 34
6.16. Year 2000......................................................................... 34
6.17. Affiliates........................................................................ 34
6.18. Subordinated Indebtedness......................................................... 35
6.19. Sale of Accounts.................................................................. 35
6.20. Sale and Leaseback Transactions................................................... 35
6.21. Letters of Credit................................................................. 35
6.22. Financial Contracts............................................................... 35
6.23. Financial Covenants............................................................... 35
6.23.1. Interest Coverage Ratio................................................. 35
6.23.2. Leverage Ratio.......................................................... 35
6.23.3 Minimum Net worth....................................................... 43
6.23.4 Minimum EBITDA.......................................................... 44
6.23.5 Capital Expenditures.................................................... 44
6.23.6. Minimum Research and Development Expenditures........................... 44
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ARTICLE VII. DEFAULTS.......................................................................... 36
ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.................................... 38
8.1. Acceleration; Facility LC Collateral Account...................................... 38
8.2. Amendments........................................................................ 38
8.3. Preservation of Rights............................................................ 39
ARTICLE IX. GENERAL PROVISIONS 39
9.1. Survival of Representations....................................................... 39
9.2. Governmental Regulation........................................................... 39
9.3. Headings.......................................................................... 39
9.4. Entire Agreement.................................................................. 39
9.5. Several Obligations; Benefits of this Agreement................................... 39
9.6. Expenses; Indemnification......................................................... 39
9.7. Accounting........................................................................ 40
9.8. Severability of Provisions........................................................ 40
9.9. Nonliability of Lenders........................................................... 40
9.10. Confidentiality................................................................... 40
ARTICLE X. THE AGENT......................................................................... 41
10.1. Appointment; Nature of Relationship............................................... 41
10.2. Powers............................................................................ 41
10.3. General Immunity.................................................................. 41
10.4. No Responsibility for Loans, Recitals, etc........................................ 41
10.5. Action on Instructions of Lenders................................................. 42
10.6. Employment of Agents and Counsel.................................................. 42
10.7. Reliance on Documents; Counsel.................................................... 42
10.8. Agent's Reimbursement and Indemnification......................................... 42
10.9. Notice of Default................................................................. 42
10.10. Rights as a Lender................................................................ 43
10.11. Lender Credit Decision............................................................ 43
10.12. Successor Agent................................................................... 43
10.13. Agent's Fee....................................................................... 43
10.14. Delegation to Affiliates.......................................................... 43
ARTICLE XI. SETOFF; RATABLE PAYMENTS.......................................................... 44
11.1. Setoff............................................................................ 44
11.2. Ratable Payments.................................................................. 44
ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS................................. 44
12.1. Successors and Assigns............................................................ 44
12.2. Participations.................................................................... 44
12.2.1. Permitted Participants; Effect.......................................... 44
12.2.2. Voting Rights........................................................... 45
12.2.3. Benefit of Setoff....................................................... 45
12.3. Assignments....................................................................... 45
12.3.1. Permitted Assignments................................................... 45
12.3.2. Effect; Effective Date.................................................. 45
12.4. Dissemination of Information...................................................... 46
12.5. Tax Treatment..................................................................... 46
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ARTICLE XIII. NOTICES........................................................................... 46
13.1. Notices........................................................................... 46
13.2. Change of Address................................................................. 46
ARTICLE XIV. COUNTERPARTS...................................................................... 46
ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.................................................................... 47
15.1. CHOICE OF LAW..................................................................... 47
15.2. CONSENT TO JURISDICTION........................................................... 47
15.3. WAIVER OF JURY TRIAL.............................................................. 47
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